Source: https://www.westerncpe.com/course/choice-of-entity-self-study/
Timestamp: 2019-11-14 12:01:05
Document Index: 431689046

Matched Legal Cases: ['§761', '§761', '§1031', '§721', '§7701', '§351', '§1244', '§1212', '§243', '§341', '§541', '§531', '§61', '§274', '§79', '§105', '§106', '§119', '§132', '§132', '§132', '§67']

This comprehensive course describes and compares sole proprietorships, partnerships, limited liability companies, C corporations, and S corporations. It examines the advantages and disadvantages of each, helping you properly select the right business entity for your clients' specific tax and liability needs. Perhaps most importantly, this course emphasizes the maximization of tax benefits in each business format. Fringe benefits, retirement plan alternatives, and nonqualified deferred compensation are also discussed in detail.
Revision Date Jun 22, 2017
Course ID SS8130274
IRS Course ID: 0MYXB-T-00540-14-S
CTEC Course ID: 2071-CE-0562
Recognize the characteristics that define a sole proprietorship, noting applicable advantages and disadvantages of the entity choice as well as formation, accounting, reporting requirements, and tax consequences for business expenditures
Identify not-for-profit activities particularly as they relate to Schedule C businesses, noting the various requirements that permit such businesses to complete the C-EZ form or request an automatic filing extension
Specify the taxes imposed on self-employed persons, noting compliance with payment requirements
Note circumstances where sole proprietorship assets are characterized on disposition
Identify available income splitting and estate planning devices and their impact on entity choice
Determine what constitutes a partnership under §761(a) including the status of joint ventures, cotenancy, publicly traded partnerships, and the special benefits of family partnerships noting several advantages and disadvantages of each as well as how partners share tax items
Identify the taxation of partners and partnerships and its effect on the preparation of individual returns and K-1s
Specify the exclusion requirements from §761 partnership treatment, noting tax rate and §1031 exchange impact
Recognize separately stated items noting the relationship of deductions to outside basis, partnership vs. partner deductions, allocation of deductions, and related filing requirements to improve accurate tax reporting
Note the closing of a partnership year requirements and applicable failure to file penalties, events that terminate a partnership, and events that do not close the year to ensure proper tax allocation
Identify types of transactions between a partner and the partnership that can influence the treatment of the transaction, and specify the character of property contributions under §721
Determine inside and outside basis, including complications caused by the contribution of services, specify their interplay with the at risk & passive rules, their impact on the disposition of partnership interests, and their effect on partnership distributions
Recognize the requirements for partnership distributions and liquidations, noting limitations, basis adjustments, exceptions, and how gains or losses affect a partnership and partners
Identify the distinguishing characteristics of limited liability companies (LLCs), noting benefits of the entity choice and as well as advantages of LLCs over C corporations
Cite reasons for choosing an LLC over an S corporation, limited partnership, and general partnership, noting applicable benefits and drawbacks of LLCs over each choice of entity
Identify the various uses for an LLC, noting ways to use the LLC entity choice to achieve client objectives and expand business-planning opportunities
Recognize the varying tax consequences of forming or converting to an LLC including possible tax differences using the California Limited Liability Company Act
Define a corporation in terms of §7701, noting the distinguishing characteristics and tax treatments of regular corporations versus other entities
Recognize the defining characteristics of personal service corporations and small business investment companies, noting their requirements and tax treatment as well as when and how clients can engage or avoid such classification for their benefit
Note the rules for the transfer of money, property or both by prospective shareholders to a corporation and the requirements of §351
Specify the requirements of §1244 stock and the small business stock exclusion
Note the differences between start-up expenses and organizational expenses
Identify corporate pitfalls and dangers noting tax recognition of the entity, tax rates, AMT computation, capital gains & losses under §1212, and the dividends received deduction under §243
Specify necessary corporate action for making allowable corporate charitable contributions, benefiting from the repeal of §341, and avoiding tax penalties under §541 and §531
Identify available corporate accounting periods noting the treatment and impact of tax-exempt income
Recognize the available identification and valuation methods for inventory, noting the characteristics and requirements for each
Identify the benefits and tax advantages of multiple corporations, noting terms and rules associated with controlled groups rules and consolidated returns
Note the rules and tax treatment for corporate liquidations and distributions
Recognize what constitutes an S corporation and specify the advantages and disadvantages associated with this choice of entity as well as its tax treatment
Identify variables that impact whether a business can choose S corporation status, ways that an S corporation may be terminated, and the related procedures that must be followed
Recognize S corporation tax treatment including special areas involving income and expenses, pass-through items, built-in gain, passive income, tax preference items, LIFO recapture tax, capital gains tax, investment credit recapture, estimated tax payments, and basis of S corporation stock
Identify S corporation owner compensation and distribution options, noting reasonable compensation requirements, related party rules, S corporation distribution taxation, tax year choices, fringe benefits, chameleon rules, and when Form 1120S must be filed
Recognize the concept behind basic fringe benefit planning, noting the definition of income under §61 and the differences between former nonstatutory and current statutory fringe benefits created by recent cases, rulings, and tax law changes
Identify the basic mechanics of typical fringe benefits, noting the fair market value of a fringe benefit under the general valuation rule or the special valuation rules as well as the requirements for the general accounting rule and the special two-month pour-over accounting rule
Determine what constitutes a §274 'employee achievement award'
Specify the rules for §79 group term life insurance noting how to implement proper coverage
Recognize the mechanics of §105 self-insured medical reimbursement plans as well as the requirements of §106 medical insurance, noting the differences between the two code sections
Specify the rules for excluding the value of meals and lodging under §119
Determine what constitutes a cafeteria plan, noting how this type of plan operates
Identify the requirements and limits of employee educational assistance programs and dependent care assistance, noting how to obtain each type of assistance
Specify which services can be deemed no-additional-cost services, what property or services are excludable from income as qualified employee discounts under §132(c), and exceptions to working condition fringes and de minimis fringes
Recognize the requirements for qualified transportation fringe benefits under §132(f), valuation methods for employer-provided automobiles, qualifications for the popular physical fitness exclusion, and the requirements and benefits of adoption assistance programs
Identify financial, planning, and estate planning services available under §132 and §67
Specify the qualification requirements for moving expenses, interest-free and below-market loans, child care benefits, corporate funded educational savings accounts, S corporation fringe benefits, and ERISA compliance requirements
Recognize the key differences between qualified deferred compensation plans and nonqualified plans, noting the major benefit of qualified plans, the basis of the benefits and contributions, the current and deferred advantages and the disadvantages of corporate plans and fiduciary responsibilities as well as prohibited transactions
Specify the requirements of the basic forms of qualified pension plans, noting recovery amounts from failed plans
Identify types of defined contribution and defined benefit plans, noting the characteristics of each as well as their effect on retirement benefits
Specify the differences between self-employed and qualified plans for other business types, noting key choice of entity factors
Specify the requirements of IRAs, SEPs, and SIMPLEs as well as the rules for tax-free Roth IRA distributions and where an individual can maximize plan benefits
Identify the advantages of postponing income under a nonqualified deferred compensation plan, noting the position of the IRS in regards to qualified compensation
Specify the purposes of nonqualified plans and factors that a nonqualified retirement benefit can be based on, noting the contractual provisions of such arrangements and necessary provisions
Recognize the IRS's position on nonqualified compensation
Identify the defining characteristics of constructive receipt and economic benefit, noting the key differences between each
Specify the differences among unfunded bare contractual promise plans, funded company account plans, and segregated asset plans, noting the requirements and tax consequences of each
Identify the basic accounting rules and subsequent tax consequences associated with nonqualified plans