Essential Legal Concepts with Tax Analysis 2023 - 30 CPE Credit

Essential Legal Concepts with Tax Analysis
Course Description & Study Guide
While accounting and the practice of law are separate professions, the accountant
must be conversant with essential legal concepts. Modern accounting practice
requires familiarity with corporate legal structure, business entities, partnership
operations, contracts, property rights, employment law, divorce, consumer
protection, will & trusts, and even bankruptcy law. This course explores these
specific areas with an emphasis on business and accounting issues. This informal
and clear guide to the basic concepts of business law provides accountants with
an excellent review of legal concepts that arise in any tax professional’s practice.
The attendees will gain the ability to recognize and discuss general legal concepts
with both client and their counsel.
Knowledge is power and nowhere is that truer than in the field of law. To gain
such a working knowledge of law, readily understandable explanations are given
to essential and related business law subjects. The accountant is guided through
the complex maze of literally hundreds of legal principles from acceptance to
zoning.
Completion Deadline & Exam: This course, including the examination, must be
completed within one year of the date of purchase. In addition, unless otherwise
indicated, no correct or incorrect feedback for any exam question will be provided.
Course Level: Overview. This program is appropriate for professionals at all organizational
levels.
Field of Study: Taxes
Prerequisite: General understanding of federal income taxation.
Advanced Preparation: None
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Learning Assignments & Objectives
As a result of studying each assignment, you should be able to meet the objectives
listed below each assignment.
ASSIGNMENT SUBJECT
Chapter 1 Asset Protection
At the start of Chapter 1, participants should identify the following topics
for study:
* Need for asset protection
* Types of creditors
* Fraudulent transfers
* Preparation for asset protection
* Types of insurance
* Buy-sell agreements
* Individual ownership and corporate ownership
* Asset protection aspects of trusts
* Co-tenancy and partnerships
* Divorce
Learning Objectives
After reading Chapter 1, participants will be able to:
1. Identify the goals and purposes of asset protection recognizing the
objections some people have about shielding assets from creditors by:
a. Citing reasons for asset protection and situations that can unexpectedly
put assets and financial security at stake;
b. Specifying sources of lawsuits and the author's concept of exploding
and imploding liability; and
c. Determining asset protection using the primary concepts of insurance,
asset placement, and statutory protections.
2. Recognize the importance of creditor types associated with asset
protection and fraudulent transfers.
3. Specify the fraudulent transfer laws and badges of fraud, define statutes
of limitation, criminal penalties, and permissible asset transfers.
4. Identify the degree and necessity of asset protection using net worth
and asset values under a balance sheet and the various ways that insurance
and buy-sell agreements can offer asset protection.
5. Recognize the asset protection advantages and disadvantages of
ownership formats and entities by:
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a. Determining the use of individual ownership and corporate ownership
in an asset protection plan including the importance of S corporations
and their estate tax planning advantages;
b. Identifying testamentary trusts, living trusts, and subcategories of
trusts recognizing their asset protection elements;
c. Specifying the various types of co-tenancy, identifying their asset
protection dangers, and several types of partnerships citing their variation
from limited liability companies; and
d. Recognizing the unique asset protection qualities of retirement
plans, custodianship, and estates as asset protection tools.
After studying the materials in Chapter 1, answer exam questions 1 to 18.
ASSIGNMENT SUBJECT
Chapter 2 Alimony & Child Support
At the start of Chapter 2, participants should identify the following topics
for study:
* Divorce or separation instrument
* Pre- and post-1984 alimony requirements
* Deducting pre-2019 alimony paid & reporting alimony received
* Recapture of alimony for types A & B agreements
* Alimony substitution trusts & annuities
* Alimony paid by an estate
* Child support
* COBRA coverage
* Qualified medical child support orders
Learning Objectives
After reading Chapter 2, participants will be able to:
1. Determine “alimony” and “separate maintenance payments” under
§§71 and 215.
2. Specify the types of §71 “divorce or separation instruments” and determine
how having an invalid decree, an amended instrument, or a
premarital agreement impacts such an instrument.
3. Identify the alimony and child support tax provisions that currently
apply from those that applied to instruments executed prior to 1985 by:
a. Specifying variables that impact whether a payment is alimony
since 1984 and determining whether a cash payment is deemed made
to or on behalf of a former spouse in order to characterize it as alimony;
b. Recalling the tax treatment of housing costs for the family residence
showing the impact of ownership when the nonoccupying
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spouse owns the home and when the occupying spouse owns the
home;
c. Identifying what rent or resident cost payments can be alimony
when a family residence is jointly owned and occupied by a spouse or
a taxpayer is required to make rent payments for a spouse;
d. Recognizing the tax treatment of life insurance premium payments,
voluntary payments, and payments to a remarried spouse
along with the advantages and disadvantages to each spouse;
e. Determining how to recharacterize otherwise deductible pre-2019
alimony payments as nondeductible identifying whether spouses are
members of different households, and identifying the alimony pitfall
of being required to make payments after a former spouse’s death;
f. Specifying the differences between child support and alimony and
thereby avoid reporting errors;
g. Citing the pre-1985 alimony requirements and periodic payments;
and
h. Determining marital relationship and the similarities and differences
in the treatment of child support under current and previous
law.
4. Identify the deduction of pre-2019 alimony paid and the reporting of
alimony received on the proper forms with required information.
5. Specify the pre-2019 alimony recapture rule for various marital
agreements and its impact on the tax treatment of past payments.
6. Recognize the use of alimony trusts to realize tax advantage and security,
determine the use of annuity contracts, and specify the proper
tax treatment of alimony paid by an estate to a former spouse of a decedent.
7. Recall the tax treatment of child support, identify two circumstances
where a payment will be fixed as child support, and specify six events
that determine whether a contingency is clearly child-related and how
to rebut this presumption of child support.
8. Recall the COBRA and qualified medical child support order rules
so as to maximize the use of health care coverage plans by:
a. Identifying whether COBRA rules apply to different plans including
notice & deadline requirements and specifying four situations
that may result in termination of continuing coverage; and
b. Determining what constitutes “qualified medical child support orders”
recognizing differences with other similar orders and identifying
the procedures, requirements, and jurisdiction of QMCSOs.
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After studying the materials in Chapter 2, answer exam questions 19 to
41.
ASSIGNMENT SUBJECT
Chapter 3 Bankruptcy
At the start of Chapter 3, participants should identify the following topics
for study:
* Tax law changes
* Bankruptcy types
* Automatic stay
* Preferences
* Priorities
* Debt discharge
* Individual bankruptcy estate
* Individual debtor
* Corporate bankruptcy
* Homesteading & garnishment
Learning Objectives
After reading Chapter 3, participants will be able to:
1. Determine how the 2005 Bankruptcy Act changed procedures, qualifications,
and tax law, and identify the most common bankruptcy types
and their influence on how an individual or business “goes bankrupt.”
2. Specify the rules for automatic stay and levy along with their impact
on “freezing” creditor activity, tax assessment, and collection.
3. Identify the differences between preferential and nonpreferential
payments together with the priority of creditor claims.
4. Recognize when debt is discharged under various bankruptcy types
and identify how to establish an individual bankruptcy estate determining
its taxable income and filing requirements.
5. Identify partnership and corporate bankruptcies, specify debts covered
under homesteading, and determine permissible garnishment
amounts and special garnishment rules.
After studying the materials in Chapter 3, answer exam questions 42 to
56.
ASSIGNMENT SUBJECT
Chapter 4 Divorce Settlements & Divisions
At the start of Chapter 4, participants should identify the following topics
for study:
* Premarital agreements
* Application of §1041
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* Incident to divorce
* Property basis
* Purchase of residence between spouses
* Purchase of business & investment property between spouses
* Division of corporate business interests
* Division of partnership business interests
* Deferred v. present division of benefits
* Individual retirement arrangements
Learning Objectives
After reading Chapter 4, participants will be able to:
1. Identify the formats that courts typically follow if a couple does not
have a premarital agreement and post-nuptial and premarital agreements
including how they relate to divorce settlements and divisions.
2. Cite the position of U.S. v. Davis on interspousal transfers and the
changes made by §1041 and, specify the requirements of §1041 and the
scope of its application.
3. Identify factors that determine when a property transfer is incident
to divorce and how to meet these factors or avoid §1041 altogether
when desired and recognize the application of §1041 to transfers in
trust under §1041(e) and to third-party transfers on behalf of a spouse
or former spouse.
4. Determine deferred tax liability and property basis for the transferor
spouse and transferee spouse under §1041 after a property settlement.
5. Recognize the application of §1041 to property transfers where the
transferee assumes liabilities encumbering the property, and identify
with appropriate records the holding period for an asset transferred
between spouses or former spouses incident to divorce.
6. Identify the dangers of purchasing a former spouse's interest in
property particularly a marital residence including its tendency to create
deferred tax liability, specify the effects of purchasing an interest in
personal or real property used in a business or held for investment,
recognize potential recapture and identify the use of an exchange to
dispose of low-basis property received in a §1041 transfer.
7. Recognize sale, redemption, recapitalization, liquidation, and thirdparty
transfers as methods of dividing a business in a marital settlement
citing unique provisions under §302, §368, §736, and §754.
8. Identify an overall tax and economic strategy for the division of pension
benefits in a marital settlement by:
a. Specifying popular methods of dividing retirement benefits in a
divorce or separation action;
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b. Determining what constitutes a “qualified domestic relations order”
along with specific information to be included in such an order
and the tax consequences of QDRO distributions;
c. Recognizing the pros and cons of deferred, present, and alternate
property division arguments;
d. Specifying the treatment of IRAs at divorce considering the IRA
deduction limit and rollovers; and
e. Locating military pensions and civil service pensions that may be
available to a former spouse.
After studying the materials in Chapter 4, answer exam questions 57 to
78.
ASSIGNMENT SUBJECT
Chapter 5 Employment
At the start of Chapter 5, participants should identify the following topics
for study:
* Employee v. independent contractor
* Unemployment compensation
* Workers’ compensation
* Overall limitation of unreasonable compensation
* Unreasonable compensation factors
* Social security retirement benefits
* Social security tax
* Medicare
* Disability
* Americans with Disabilities Act of 1990
Learning Objectives
After reading Chapter 5, participants will be able to:
1. Specify common-law rules used to determine employee status for
FICA and federal income tax withholding, determine FICA and
FUTA taxes including their reporting, and identify unreasonable compensation
issues.
2. Recognize the mechanics of the Social Security system allowing better
retirement planning by:
a. Determining how the system works, who qualifies, and when such
participants are eligible for benefits; and
c. Locating clients’ retirement benefits following a multi-step process.
3. Identify Social Security taxes, their rates, and covered earnings to
determine actual amounts taken from gross pay.
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4. Determine Medicare Part A and Medicare Part B differences and
what is needed to qualify, and identify the eligibility requirements of
Social Security disability and survivors’ benefits.
After studying the materials in Chapter 5, answer exam questions 79 to
95.
ASSIGNMENT SUBJECT
Chapter 6 Entities & Title
At the start of Chapter 6, participants should identify the following topics
for study:
* Individual ownership & sole proprietorships
* Corporations
* Trusts holding title & business trusts
* Co-tenancy taxation, percentage interests, & partition
* Partnership taxation & recapitalization
* Family partnerships
* Limited liability companies
* Retirement plans
* Custodianship
* Estate
Learning Objectives
After reading Chapter 6, participants will be able to:
1. Identify tax and legal title formats recognizing the distinctions
among these entity formats by:
a. Determining the advantages and disadvantages of holding property
individually and through a sole proprietorship or a corporation
along with associated title pitfalls;
b. Specifying the C corporations groups including the estateplanning
problems associated with each; and
c. Recognizing the advantages that partnerships may have over corporations.
2. Cite the S corporation requirements and tax advantages and disadvantages
particularly those associated with incorporating a farm.
3. Specify the title holding benefits of trusts, co-tenancy, partnerships,
and limited liability companies and the tax characteristics of each,
identify the types of retirement plans used to provide lifetime benefits
to a business owner and to employees, determine how title can be held
on behalf of minors and the tax treatment of custodianships, and specify
the tax treatment of a probate estate.
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After studying the materials in Chapter 6, answer exam questions 96 to
104.
ASSIGNMENT SUBJECT
Chapter 7 Insurance
At the start of Chapter 7, participants should identify the following topics
for study:
* Homeowner’s, automobile, and disability insurance
* Life insurance
* Annuities
* Buy-sell agreements
* Entity & cross-purchase agreements
* Purchase price & terms
* Community property
* Professional corporations
* S corporations
* Sole shareholder planning
Learning Objectives
After reading Chapter 7, participants will be able to:
1. Identify characteristics of homeowner's, automobile, and disability
insurance and what asset protection they may offer.
2. Specify persons in which rights are placed by life insurance and reasons
to purchase life insurance and the benefits, uses, and types of life
insurance, identify variables that influence when life insurance is taxable
for federal estate tax purposes, and cite reasons for establishing an
irrevocable life insurance trust in order to achieve several estate tax
planning advantages.
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