Tax, Bankruptcy, and Financial Problems
Field of Study:
Test the treacherous (and shark infested) waters of tax, bankruptcy and financial problems. This course will teach participants how to apply, implement, and evaluate the strategic tax aspects of bankruptcy, property settlements, debt cancellation, and foreclosure. Current perspectives on asset protection, repossession, and bad debts are examined with an emphasis on planning considerations. The cancellation of indebtedness income inclusion rules are examined in the context of debt forgiveness and property foreclosure. Emphasis is given to the exceptions from income inclusion contained in §108. The tax treatment of property repossession under §1038 is explored with detail given to the calculation of gain and received property basis. Finally, eldercare and estate planning are reviewed and detailed.
After completing this course you will be able to:
- Determine how the 2005 Bankruptcy Act changed procedures, qualifications and tax law, and identify the most common bankruptcy types noting their influence on how an individual or business “goes bankrupt.”
- Specify the rules for automatic stay and levy noting their impact on “freezing” creditor activity, tax assessment, and collection.
- Identify the differences between preferential and nonpreferential payments noting the priority of creditor claims.
- 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.
- Identify partnership and corporate bankruptcies, specify debts covered under homesteading, and determine permissible garnishment amounts noting special garnishment rules.
- Identify types of marital property and their likely division in marital property settlements and specify five legal principles used in dividing assets and providing support on divorce or separation.
- Determine the benefits of premarital agreements and the requirements and permissible provisions for a valid and comprehensive agreement under the Uniform Premarital Act.
- Specify the position of U.S. v. Davis on interspousal transfers noting the changes made by §1041, and identify the requirements of §1041 and the scope of its application.
- Identify factors that determine whether a property transfer is incident to divorce and how to meet these factors or avoid §1041 altogether when desired.
- Determine the application of §1041 to transfers in trust under §1041(e) and to third party transfers on behalf of a spouse or former spouse.
- Recognize deferred tax liability by identifying property basis for the transferor spouse and transferee spouse under §1041 after a property settlement.
- Specify the application of §1041 to property transfers where the transferee assumes liabilities encumbering the property, and choose the holding period for an asset transferred between spouses or former spouses incident to divorce.
- Recall the dangers of purchasing a former spouse's interest in property particularly a marital residence and its tendency to create deferred tax liability.
- Determine tax 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.
- Specify common disposition alternatives available on divorce, recall the home sale exclusion requirements, and identify the tax treatment and use of installment obligations under §453 in divorce.
- Recognize sale, redemption, recapitalization, liquidation and third-party transfers as methods of dividing a business in a marital settlement citing unique provisions under §302, §736 and §754.
- Identify whether gain or loss on a sale of real or personal property is capital or ordinary, recognize the tax treatment of such gain or loss and recall the role and tax treatment of life insurance in property set-tlements.
- Specify popular methods of dividing retirement benefits in a divorce or separation action identifying the requirements and tax consequences of a “qualified domestic relations order (QDRO).
- Choose an overall tax and economic strategy for the division of pension benefits in a marital settlement.
- Recognize the goals and purposes of asset protection noting the objections about shielding assets from creditors.
- Identify the types of creditors associated with asset protection and fraudulent transfers.
- Determine fraudulent transfer noting badges of fraud, statutes of limitation and criminal penalties, and specify permissible asset trans-fers.
- Recognize the necessity of asset protection noting net worth under a balance sheet, and determine asset values in the preparation of a bal-ance sheet.
- Identify how insurance and buy-sell agreements can offer asset protection.
- Recognize the asset protection advantages and disadvantages of ownership formats and entities.
- Identify deductible §213 medical care expenses for federal tax purposes.
- Cite variables that impact the deductibility of §170 charitable contributions noting qualified organizations and limitations for these purposes, and identify the types of contributions that can be made, their tax treatment, and substantiation requirements.
- Determine what constitutes a §165 casualty and theft noting the rules for taking a deduction for all or part of each loss.
- Recognize the effect that debt cancellation has on net worth and potential income inclusion from cancellation of indebtedness income, identify exceptions to the general income inclusion rule noting their tax effect.
- Specify the reduction of tax attributes on cancellation noting any special basis reduction rules, recognize the depreciable property election, and determine what constitutes individual, partnership and S corporation bankruptcies identifying variables used in characterizing shares as nominal or token.
- Determine gain or loss resulting from foreclosure or repossession including its timing and character, identify reporting and filing requirements of such items, and specify the tax danger of acquiring one's own debt at a discount.
- Select which §1038 repossession rules apply to a transaction, and determine basis and gain or loss resulting from repossession of personal property using installment method and the non-installment method sales.
- Identify the distinctions between the rules, calculations and effects of repossessions of personal and real property, and specify when a §166 bad debt deduction may be taken if the seller repossesses real property.
- Determine bad debt categories noting their tax treatment and effect on accounting and reporting.
- Identify the qualifications for §166 tax treatment of business bad debts.
- Specify ways to manage an incompetent person’s estate, recognize joint tenancy and its benefits, and identify the levels of conservatorship that can influence assistance in management and protection of an estate and/or personal care.
- Recognize durable powers and funded revocable living trusts noting out their uses and limitations in elderly and disabled planning.
- Identify the eldercare benefits of Medicare and Medicaid, countable income and asset groupings under Medicaid.
- Determine available health care decisions such as having a living will, identify the distinctions between Supplemental Security Income and Social Security disability benefits, determine SSI asset groups, and specify requirements for SSI and Social Security disability benefits.
- Determine what constitutes estate planning for clients.
- Identify the concepts of “stepped-up basis” and “modified carryover basis” for estate tax purposes.
- Specify estate-planning goals, and recall the benefits and drawbacks of the primary dispositive plans.
- Identify various types of estate trusts and the family documents that every taxpayer should consider, and determine the advantages and disadvantages of the former private annuity format.
General understanding of federal income taxation.
Type of delivery method:
Recommended CPE credits:
Final examination expiration date:
The program participant will have one year from the date of purchase to complete the course and final examination.
Web CPE is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org