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Choose On-Demand or DVD/Text/Manual – Available NOW
This video-based course featuring Sidney Kess and an expert panel reviews major developments affecting 1040 return preparation for 2009 and useful tax planning strategies.
With its video expanded to review more developments in greater detail as well as provide more tax planning tips, the course provides coverage of recently enacted tax laws; included are The American Recovery and Reinvestment Act of 2009 and The Worker, Retiree and Employer Recovery Act of 2008 — and more!
Objectives:
Prerequisite: Knowledge of individual income taxation and Form 1040 preparation.
In this video, Sidney Kess, CPA, J.D., LL.M., interviews Alan J. Dlugash, CPA, MBA; Vern B. Hoven, CPA, MTA; Sharon Kreider, CPA, EA; Stephen J. Krass, Esq., LL.B., LL.M.; Joseph W. Walloch, CPA; Julie A. Welch, CPA, CFP and Christopher Williams, CPA.
The Additional Text and Manual are for group study training only. Unlike other formats, they have no exam answer sheet and cannot be used to earn self-study credit.
Summary of Major Developments
The American Recovery and Reinvestment Act amended the required estimated tax payments required for small businesses. Eligible Small Businesses. A taxpayer that has AGI less than $500,000 for 2008 and fewer than 500 employees qualifies if more than 50% of gross income from 2008 was from the business. The required estimated tax payments for 2009 must equal the lesser of 90% of the current year tax due (for 2009) or 90% of the total 2008 tax.
Individual taxpayers can check the status of their federal refund on the IRS website or by calling the Teletax System at 800-829-4477 or the IRS Refund Hotline at 800-829-1954.
Chapter 2 - Filing Status
The Small Business and Work Opportunity Tax Act of 2007 included a provision that allows some husband-wife ventures to elect out of the partnership rules for federal tax purposes for tax years beginning after 2006. To be eligible for the election out, the spouses must file jointly, and the operation must be a qualified joint venture. Electing out of the partnership tax rules will not change the married couple's federal income tax liability or their SE tax liability. However, it will allow the couple to avoid having to file annual Forms 1065 for the husband-wife venture.
Chapter 2 - Innocent Spouse Relief
The Ninth Circuit Courts have held that to qualify for innocent spouse relief under IRC Section 6015, a taxpayer must have filed a joint return with his or her spouse (Christensen, No. 06-71881 9th Cir. 4/22/08). The courts rely on the language of Section 6015 itself, which states that the innocent spouse relief applies to "an individual who has made a joint return" and provides procedures for relief from "liability applicable to all joint filers."
Chapter 2 - Exemptions and Dependents
The phase-out of personal exemptions is reduced by two-thirds in 2008 and 2009. For 2010 and beyond, the phase-out is scheduled to disappear.
When a divorced or separated custodial parent (the parent with whom the child spends more nights during the year) signs Form 8332 to release a child's dependency exemption to the noncustodial parent, IRS Notice 2006-86 clarifies that the noncustodial parent is allowed to claim the dependency exemption deduction and the child tax credit for that child. However, four other tax benefits remain off limits for the noncustodial parent.
Proposed regulations issued in 2007 clarify the rules for claiming a dependency exemption for a child of divorced or separated parents. The proposed regulations also explain how a custodial parent can waive the dependency exemption (by signing Form 8332) to allow the noncustodial parent to claim the exemption.
New tiebreaker rules apply when more than one taxpayer is eligible to claim a child as a dependent. Generally, the rules require that the individual with the higher AGI must claim the child.
New rules allow a taxpayer to claim a dependent as a qualifying relative if the parent of the child lives in the home but does not file, nor is required to file, a tax return.
Determination of custody of a child is determined according to the number of nights a child spends with each parent.
Form 8332 has been revised so that a parent who had waived the right to claim a child as a dependent may now revoke that waiver as long as the noncustodial parent has received notice.
Chapter 3 - Dividend and Interest Income
The reduced tax rates for qualified dividends were extended through the end of 2010 by the Tax Increase Prevention and Reconciliation Act. However, the reduced tax rates were limited by the Small Business and Work Opportunity Act of 2007. Effective for tax years beginning after May 25, 2007, children under age 19 and students under age 24 are subject to the "kiddie tax."
The rule allowing a taxpayer to elect to tax dividend income at ordinary rates to create additional investment income in order to deduct more investment interest expense was extended through 2010 by the Tax Increase Prevention and Reconciliation Act.
Chapter 3 - Compensation Issues
The Small Business and Work Opportunity Tax Act of 2007 (SBTA) included a provision to ensure that the employer tip credit won't be reduced when the federal minimum wage goes up, as it will in stages pursuant to other 2007 legislation. This provision affects tips received on services performed after December 31, 2006. In addition, the SBTA included a new provision that allows the taxpayer's AMT liability to be reduced by the employer tip credit. This provision applies to credits for taxable years beginning after December 31, 2006 and carrybacks of such credits.
For purposes of the employer tip credit, minimum wage remains at $5.15.
Chapter 3 - Employee Stock Options
In 2006, the Tax Court ruled that the $3,000 annual limitation on deductible net capital losses that applies for regular tax purposes also applies for AMT purposes. The taxpayer argued that the limitation does not apply for AMT [Merlo, 126 TC 205 (2006)]. In 2007, the Tax Court again reached the same conclusion [Evan Marcus, 129 TC No. 4 (2007)]. Note that AMT net capital losses may be larger than regular tax net capital losses if the losses result from selling shares acquired by exercising incentive stock options.
Chapter 3 - Nonqualified Deferred Compensation Plans
In 2007, the IRS released final Section 409A regulations, which are nearly 400 pages long. The final regulations are generally consistent with earlier guidance (in Notice 2005-1 and proposed regulations), but they offer more specifics and clarifications.
In Notice 2007-86, the IRS extended transitional relief for implementing the final regulations under Section 409A. Nonqualified deferred compensation plans are now generally required to comply with the final regulations beginning January 1, 2009.
In Notice 2007-100, the IRS provided relief for certain operational failures that are corrected in the same year. Additionally, it provides transitional relief through 2010 for operation failures up to a certain amount that are not corrected in the same tax year.
In Notice 2006-79, the IRS extended the remedial period during which existing or new nonqualified deferred compensation plans can be amended to comply with the Section 409A rules through December 31, 2008.
Chapter 3 - Nontaxable Fringe Benefits
A technical correction included in the Gulf Opportunity Zone Act of 2005 clarifies that an individual can qualify as a dependent for purposes of a dependent care assistance program without regard to whether the individual has gross income exceeding $3,500 for 2008 or whether the individual is married and files a joint return.
In 2007, the IRS issued updated proposed regulations covering cafeteria benefit plan arrangements, including FSAs. The updated rules reflect current realities such as the use of debit cards by employees to pay for reimbursable expenses. The proposed regulations are generally effective after 2008.
The IRS published an article on its website concluding that a sole shareholder-employee of an S corporation cannot purchase health insurance in the shareholder's personal name and claim an above-the-line deduction for the premiums under IRC Sec. 162(l).
The Heroes Earning Assistance and Relief Tax Act amends IRC §125 by redesignating subsections (h) and (i) allowing for distribution of unused benefits in a health flexible spending arrangement for individuals called to active duty.
In Notice 2007-76, the IRS has delayed the effective date of Rev. Rul. 2006-57, IRB 2006-47, 911, which describes circumstances in which an employer may use smartcards, debit or credit cards, and other electronic media to provide employees with qualified transportation fringe benefits that are excludable from gross income. The original effective date, January 1, 2008, is now delayed to January 1, 2009. Employers and employees may, however, continue to rely on Rev. Rul. 2006-57 with respect to transactions occurring prior to January 1, 2009.
For 2009 and beyond, an employer may reimburse employees up to $20 per month for bicycle commuting expenses, as a tax-free fringe.
Chapter 3 - Taxable Fringe Benefits
Under a change enacted by the Tax Increase Prevention and Reconciliation Act, the base housing amount used in calculating the foreign housing cost exclusion in a taxable year is 16% of the amount computed on a daily basis of the foreign earned income exclusion limitation, multiplied by the number of days of foreign residence or presence in that year, with reasonable foreign housing expenses in excess of the base housing amount remaining excluded from income, but with a limitation on the exclusion of 30% of the maximum amount of the taxpayer's foreign earned income exclusion.
Chapter 3 - Retirement Plan Distributions
The Pension Protection Act of 2006 included a provision allowing a non-spouse beneficiary of a retirement plan to directly rollover the inherited retirement plan balance into an IRA, effective for distributions after December 31, 2006. The receiving IRA is then treated as an inherited IRA of the non-spouse beneficiary and is subject to the minimum required distribution rules for such accounts.
The Pension Protection Act of 2006 included a provision that allows direct rollovers from retirement plans into Roth IRAs, starting in 2008 (subject to the usual $100,000 AGI restriction on Roth conversion transactions).
Beginning in 2007, another Pension Protection Act of 2006 change permits rollovers of after-tax contributions from a qualified retirement plan into a receiving defined benefit plan (subject to a separate accounting requirement) or a receiving tax-sheltered annuity arrangement (also subject to a separate accounting requirement). To qualify, the rollovers must be accomplished via direct (trustee-to-trustee) transfers.
Under yet another Pension Protection Act of 2006 change, an individual taxpayer can now arrange for a direct deposit of all or a portion of his or her federal income tax refund.
On-Demand format – Available NOW
2009 Kess Individual Tax Update On-Demand Series (153470)
NASBA Field of Study: Taxes
Level: Update
Recommended CPE Credit: 9.5
Regular: $173.75 /AICPA Member: $139.00
This course’s video and text content covers – with planning tips – Internal Revenue Service developments, the American Recovery and Reinvestment Act of 2009, the Worker, Retiree, and Employer Recovery Act of 2008, provisions of other tax laws effective in 2009, changes to Form 1040, filing requirements and filing status, exemptions and dependents, dividend income, interest income, employee stock options, fringe benefits, retirement plan distributions, annuities, Social Security benefits, state income tax refunds, tax planning to pay for college, making gifts, hobby losses, passive activity losses, home office expenses, travel and entertainment expenses, depreciation, net operating losses, capital gains and losses, installment sales, depreciation recapture, loss on 1244 stock, like-kind exchanges, involuntary conversions, sale of a principal residence, educator expenses, self-employed retirement plans and IRAs, health savings account deduction, moving expenses, the self-employed health insurance deduction, alimony paid, and the penalty on early withdrawal of savings, deduction for domestic production activities, the standard deduction, medical expenses, tax expense, interest expense, charitable contributions, casualty and theft losses, miscellaneous itemized deductions, alternative minimum tax, the kiddie tax, estimated tax and penalties, tax credits, and extension requests, and non-Post Office delivery.
Objectives:
Prerequisite: Knowledge of individual income taxation and Form 1040 preparation.
In the video, Sidney Kess, CPA, JD, LL.M., discusses those topics with Alan J. Dlugash, CPA, MBA, Vernon Hoven, CPA, MTA, Sharon Kreider, CPA, EA, Stephen J. Krass, LL.B., LL.M, Joseph W. Walloch, CPA, Julie A. Welch, CPA, CFP, and Christopher Williams, CPA.
2009 Kess Individual Tax Update: Key Developments, Filing, Exemptions, Income (153480)
NASBA Field of Study: Taxes
Level: Update
Recommended CPE Credit: 2.5
Regular: $86.25 /AICPA Member: $69.00
This course’s portion of the video and text content covers – with planning tips – Internal Revenue Service developments, the American Recovery and Reinvestment Act of 2009, the Worker, Retiree, and Employer Recovery Act of 2008, provisions of other tax laws effective in 2009, changes to Form 1040, filing requirements and filing status, exemptions and dependents, dividend income, interest income, employee stock options, and fringe benefits.
Prerequisite: Knowledge of individual income taxation and Form 1040 preparation.
In the video, Sidney Kess, CPA, JD, LL.M., discusses those topics with Vernon Hoven, CPA, MTA, Sharon Kreider, CPA, EA, Julie A. Welch, CPA, CFP, and Christopher Williams, CPA.
2009 Kess Individual Tax Update: Distributions, Education, Business Transactions, Gains and Losses (153490)
NASBA Field of Study: Taxes
Level: Update
Recommended CPE Credit: 3.5
Regular: $86.25 /AICPA Member: $69.00
This course’s portion of the video and text content covers – with planning tips – retirement plan distributions, annuities, Social Security benefits, state income tax refunds, tax planning to pay for college, making gifts, hobby losses, passive activity losses, home office expenses, travel and entertainment expenses, depreciation, net operating losses, capital gains and losses, installment sales, depreciation recapture, loss on 1244 stock, like-kind exchanges, involuntary conversions, and sale of a principal residence.
Prerequisite: Knowledge of individual income taxation and Form 1040 preparation.
In the video, Sidney Kess, CPA, JD, LL.M., discusses those topics with Alan J. Dlugash, CPA, MBA, Vernon Hoven, CPA, MTA, Sharon Kreider, CPA, EA, Stephen J. Krass, LL.B., LL.M, Joseph W. Walloch, CPA, Julie A. Welch, CPA, CFP, and Christopher Williams, CPA.
2009 Kess Individual Tax Update: Adjustments to Income, Itemized Deductions, AMT, Credits (153500)
NASBA Field of Study: Taxes
Level: Update
Recommended CPE Credit: 3.5
Regular: $86.25 /AICPA Member: $69.00
This course’s portion of the video and text content covers – with planning tips – educator expenses, self-employed retirement plans and IRAs, health savings account deduction, moving expenses, the self-employed health insurance deduction, alimony paid, and the penalty on early withdrawal of savings, deduction for domestic production activities, the standard deduction, medical expenses, tax expense, interest expense, charitable contributions, casualty and theft losses, miscellaneous itemized deductions, alternative minimum tax, the kiddie tax, estimated tax and penalties, tax credits, and extension requests, and non-Post Office delivery.
Prerequisite: Knowledge of individual income taxation and Form 1040 preparation
In the video, Sidney Kess, CPA, JD, LL.M., discusses those topics with Alan J. Dlugash, CPA, MBA, Vernon Hoven, CPA, MTA, Sharon Kreider, CPA, EA, Stephen J. Krass, LL.B., LL.M, Joseph W. Walloch, CPA, Julie A. Welch, CPA, CFP, and Christopher Williams, CPA.
Note: The On-Demand courses will not include the Text content. This year the courses in the On-Demand Series provide a quicker, smaller-size update on tax developments by including the same video and Manual content as in the DVD/Text/Manual format but not the Text content.
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