1040 Workshop – 30 hrs. Tax CPE
Designed to make the practitioner comfortable with “high traffic” issues, this course enables participants to discuss and handle individual 1040 tax essentials. The course examines and explains the practical aspects of return preparation and individual planning, bridging the gap between theory and application. Significant new developments are summarized with emphasis on tax savings ideas.
Practical applications and illustrations are used to systematically explore tax deferral, reduction, and elimination opportunities accompanying return preparation. For example, the analysis of gross income is discussed together with income splitting techniques; property transactions are examined alongside like-
Course No. 9012
Instructional Delivery Method: QAS Self-Study
Format: Online pdf (619 pages). Printed book available.
Purchase the optional printed book: Book Only
Prerequisites: General understanding of federal income taxation
CPE Credit: 30 hrs.
Field of Study: Taxes
Course expiration: You have one year from date of purchase to complete the course.
Course Revision Date: March 2018
Learning Assignments & Objectives
Individual Tax Elements
At the start of Chapter 1, participants should identify the following major topics for study:
* Tax rates and tables
* Filing status
* Gross income
* Dividends and distributions
* Discharge of debt income
* Exclusions from income
* Nonbusiness and personal deductions
* Education and medical expenses
* Casualty and theft losses
* Tax credits
After reading Chapter 1, participants will be able to:
1. Identify federal revenue tax sources noting the definitive role of gross income and, determine a client’s tax liability using current rates, tables, and statutory amounts, and their withholding and/or estimated tax responsibility.
2. Specify the various filing statuses and their filing requirements noting the advantages and disadvantages of each.
3. Determine what constitutes gross income under §61 noting the tax treatment of compensation, fringe benefits, rental income, Social Security benefits, alimony, prizes and awards, identify dividend and distribution types and their tax differences, and specify how debt discharge can result in taxable income.
4. Identify the mechanics of income exclusions such as education-related exclusions, gift and inheritance exclusions, insurance, personal injury awards, interest on state and local obligations, and the foreign earned income exclusion.
5. Recognize income tax deductions and their use to reduce tax liability by:
a. Identify personal, spousal and dependency exemptions and reporting requirements including pre-2005 dependency rules;
b. Specify the deductibility of §163 interest categories, §162 educational expenses, pre-2018 §217 moving expenses, pre-2018 §165 casualty & theft losses, and §164 taxes noting their proper reporting and substantiation;
c. Determine variables that impact the deductibility of charitable contributions, and identifying qualified organizations, permissible contributions contribution limitations, their tax treatment, and substantiation requirements;
d. Identify the deductibility of medical care expenses including medical insurance, meals and lodging, transportation, home improvements and lifetime care payments noting the impact of Medicare;
e. Specify deductions that are subject to the 2% of AGI limitation, deductions not subject to the pre-2018 2% limit, and nondeductible expenses.
6. Determine distinctions among several types of tax credits identifying the eligibility requirements and noting the cited changes created by recent tax legislation to individual tax returns.
After studying the materials in Chapter 1, answer the exam questions 1 to 49.
Expenses, Deductions and Accounting
At the start of Chapter 2, participants should identify the following major topics for study:
* Landlord’s rental expenses
* Health insurance costs
* Home office deduction
* Travel and entertainment expenses
* Employee expense reimbursement and reporting
* Automobile deductions
* Fringe benefits
* Methods of accounting
* Expensing and depreciation
After reading Chapter 2, participants will be able to:
1. Recognize the tax treatment of rental property expenses noting their impact on landlords and tenants taking into consideration the tax differences given to rent, advance payments, and security deposits.
2. Identify the application of the hobby loss rules to a business, determine deductible health insurance costs and the requirements of the home-office deduction, and specify self-employment taxes and available business and investment credits.
3. Determine how to properly deduct travel and pre-2018 entertainment expenses by:
a. Identifying deductible business travel expenses, a taxpayer’s tax home, if any, and work locations based on the IRS’s definition, and recalling the “away from home” requirement and “sleep and/or rest” rule;
b. Specify the key elements of deductible domestic and foreign business travel costs noting the Reg. §1.162 deduction of convention and meeting expenses;
c. Identify §274 pre-2018 entertainment deductibility tests, determining the limits on home entertaining, ticket purchases, and meals and entertainment noting eight exceptions to the percentage reduction rule; and
d. Recognize the substantiation requirements associated with business gifts, employee achievement awards, and sales incentive awards.
4. Determine the differences between accountable and nonaccountable plans including the requirements for an accountable plan particularly adequately accounting for travel and other employee business expenses.
5. Determine what constitutes local transportation and commuting including how nondeductible personal commuting relates to local business transportation expenses.
6. Identify the apportionment of automobile expenses between personal and business use, the actual cost and standard mileage methods, and the gas guzzler tax.
7. Specify the various types of excluded fringe benefits that can increase employers’ deductions and incentive-based compensation of employees listing examples of each.
8. Recognize the cash, accrual, or other methods of accounting, select available accounting periods noting their impact on income and expenses, and identify expensing, depreciation, and amortization.
After studying the materials in Chapter 2, answer the exam questions 50 to 112.
At the start of Chapter 3, participants should identify the following major topics for study:
Property Transfers and Retirement Plans
* Sales and exchanges of property
* Home sale exclusion
* Installment sales
* Involuntary conversions
* At-risk rules
* Like-kind exchanges
* Retirement plans
After reading Chapter 3, participants will be able to:
1. Specify the tax consequences on the sale of easements and the holding period and basis of inherited property.
2. Identify the application elements of the §121 home sale exclusion noting associated safe harbor regulations.
3. Recognize the importance of the installment method and §453 requirements, and specify the §453 basic terminology.
4. Identify the variables that determine which §1038 rules apply noting distinctions among the rules, calculations, and effects of repossessions of personal property and repossessions of real property, and recognize when a bad debt deduction may be taken on a repossession.
5. Specify the tax treatment of a §1033 involuntary conversion by:
a. Determining related terminology and the tax consequences of receiving a condemnation award or severance damages;
b. Identify gain or loss from condemnations noting the reporting of payments associated with involuntary conversions; and
c. Determine whether clients can postpone gain on condemned, damaged, destroyed, or stolen property and specifying the related party rule.
6. Recognize the scope of the §465 at-risk rules and their effect on property depreciation, and identify the requirements, mechanics, and types of §1031 like-kind exchange.
7. Identify qualified deferred compensation plans and nonqualified plans by:
a. Determine the major benefit of the qualified deferred plans and the calculation basis of benefits and contributions; and
b. Recognize the current and deferred advantages and the disadvantages of corporate plans noting fiduciary responsibilities and prohibited transactions.
8. Identify the requirements of the basic forms of qualified pension plans permitting clients to compare and contrast such plans.
9. Determine the distinctions between defined contribution and defined benefit plans, specify the types of defined contribution plans, and identify their effect on retirement benefits.
10. Identify how self-employed plans differ from qualified plans for other business types and owners, and specify the requirements of IRAs and the special requirements of Roth IRAs.
11. Determine what constitutes SEPs and SIMPLEs noting the mechanics and eligibility requirements of each type of plan.
After studying the materials in Chapter 3, answer the exam questions 113 to 171.
At the start of Chapter 4, participants should identify the following major topics for study:
Losses, AMT, and Compliance
* Passive loss rules
* Suspension of disallowed losses under §469
* Computing the alternative minimum tax
* Minimum AMT tax credit
* Reporting compliance rules and provisions
* Accuracy related penalties
* Information reporting penalty final regulations
* Penalty for unrealistic position
* Statute of limitations for assessments
* Examination of returns
After reading Chapter 4, participants will be able to:
1. Identify basic income types and the “buckets” of income and loss under §469 that can influence what can be deducted, determine the suspension of disallowed passive losses, and recognize the special rules for transfers deemed not to be fully taxable dispositions.
2. Specify differences between the regular and alternative minimum tax noting the application tax preferences and adjustments, and determine the life of assets under ADS, alternative minimum taxable income, passive losses under the AMT, and what constitutes ACE.
3. Identify the reporting requirements for real estate transactions, independent contractors, and cash reporting.
4. Recognize types of accuracy related and unrealistic position penalties, and specify the IRS’s examination of returns policy and assessment process including applicable statute of limitations.
After studying the materials in Chapter 4, answer the exam questions 172 to 200.