Critical Tax Issues for Increasing Wealth

• Chapter 1 - Top Tax-Saving Strategies for Small Business Owners
• Learning Objectives
• Introduction
• Business Co-Owners Need Buy-Sell Agreements
  • Buy-Sell Agreement Basics
  • Redemption Agreements
  • Cross-Purchase Agreements
  • Hybrid Agreements
  • Funding Buy-Sell Agreement Obligations
  • Tax-Saving Provisions for Buy-Sell Agreements
  • Buy-Sell Agreements also Have Estate Planning Advantages
• Sole Proprietors Can Hire Their Spouses and Save Taxes
  • Set Up Medical Reimbursement Plan
  • Mind the Details
• Sole Proprietors Can Hire Their Kids and Save Taxes
• Tax Savings from Work-Related Education Expenses
  • When Is Tax-Favored Treatment Available?
  • When Education Fails Tax-Law Standards
  • Deducting MBA Expenses
  • What about Undergraduate Degree Costs?
  • Remember Higher-Education Tax Credits and Tuition Deduction
• Deduct College Tuition for Business Owner’s Child as Business Expense
  • Pass Section 127 Tests
  • Compound Tax Savings with Other Education Breaks
• Deductions for Business Travel
  • Deduct Domestic Transportation Costs
  • Take Advantage of Saturday Night Stayover Rule
  • Deduct Foreign Travel Expenses
• Consider Big Vehicles for Big Tax Savings
  • Reduced Section 179 Deduction for Heavy SUVs
  • Despite $25,000 Limitation, Depreciation Rules for Heavy SUVs Are Still Very Favorable
  • Do Not Forget Section 179 Taxable Income Limitation
  • Do Not Forget Section 179 Deduction Phase-Out Rule
  • Mind Stricter Rules for Corporate-Owned Vehicles
  • Bigger Section 179 Deduction for Tax Years Beginning in 2008
  • First-Year Bonus Depreciation Is Back (Temporarily)
  • Other Caveats
  • Plan Ahead to Preserve Client’s Section 179 Tax Savings for Heavy Business Vehicle
• Deduction for Office in the Home
  • Home Office Used for Self-Employed Business
  • Home Office Used for Work as Employee
• Claiming Gain Exclusion for Home Used Partly for Business
  • Treatment of Business Portion of Property
• Health Savings Accounts
  • HSA Basics
  • Clients Can Rake in Major Tax Savings over the Years
  • Those 55 and Older Can Make Larger Contributions
  • Eligibility Rules
  • FSA/HRA Rollovers
  • IRA Rollovers
  • Employer-Funded HSAs
  • How to Set Up an HSA
  • Conclusion on HSAs
• Summary
• Question
• Chapter 2 - Maximizing the Home Sale Gain Exclusion Privilege
• Learning Objectives
• Introduction
• Home Sale Gain Exclusion Basics
• What Qualifies as a Principal Residence?
• Passing Ownership and Use Tests (or Not)
  • Co-Ownership by Unmarried Taxpayers
  • Claiming Exclusion on Joint Return
  • Claiming Exclusion after Spouse’s Death
  • Special Exception for Unmarried Surviving Spouses May Permit Larger $500,000 Gain
  • Exclusion
  • Periods of Ownership and Use Need Not Be Concurrent
• Meeting the Anti-Recycling Rule (or Not)
• Excluding Gain from Sale of Land Next to Residence
• Claiming Reduced Exclusion for “Prematureâ€? Sales
  • Premature Sale Due to Employment Change
  • Premature Sale Due to Health Reasons
  • Premature Sale Due to Certain Unforeseen Circumstances
  • Premature Sales in Other Situations
  • Premature Sale of Property Used for Business or Rental
  • Reduced Gain Exclusion after Marriage
• “Electing Outâ€? of Gain Exclusion
• More Tax-Smart Home Sale Strategies
  • Rent Out Former Principal Residence and Claim Gain Exclusion Years Later
  • Swap Greatly Appreciated Residence for Income-Producing Property in Section 1031
  • Exchange
  • Combine Section 1031 Exchange with Gain Exclusion Break to Collect Tax-Free Cash
  • Hold Greatly Appreciated Home until Bitter End
• Other Tax Planning Implications of the Gain Exclusion Privilege
• Impact on Client Recordkeeping
• Understanding the Tax Implications of Personal Residence Short Sales and Foreclosures and the
• New Exclusion for Cancellation of Debt Income from Principal Residence Mortgages
  • Tax Rules for Cancellation of Debt Income
  • What If the Lender Forecloses?
  • New Exception for Principal Residence Mortgage Debt Discharges Will Save the Day for Many
  • Clients
• Summary
• Chapter 3 - State-of-the-Art College Saving and Financing Strategies
• Learning Objectives
• Introduction
• Maximize Well-Known College Tax Breaks
  • Claim Hope Scholarship Credit
  • Claim Lifetime Learning Credit
  • Rules Applying to Both Credits
  • Beating the System
  • Write-Off College Tuition Costs
  • Deduct College Loan Interest
  • Contribute to Coverdell Education Savings Accounts (Formerly Education IRAs)
  • Tax-Free Employer Reimbursements for Higher Education Costs
  • Tax-Free U.S. Savings Bond Interest for College
  • Accrual Method for Savings Bonds Held by College-Bound Child
  • Penalty-Free IRA Withdrawals for Higher Education Costs
• Tax-Smart College Financing Maneuvers for High-Income Clients
  • Section 529 Plans (Also Known as Qualified Tuition Programs)
  • Saving for College in Child’s (Student’s) Name May No Longer Be Inadvisable
  • Saving for College Using Parent’s Taxable Account
  • Saving for College Using Child’s Roth IRA
  • Make Direct Gifts to College for Tuition
• Last-Minute College Financing Strategies
  • Take out Home Equity Loan
  • Gift Appreciated Assets; Sell Loss Assets
  • Borrow from Qualified Retirement Plan Account
• Summary
• Chapter 4 - Strategies for Divorcing Clients
• Learning Objectives
• Introduction
• Tax Planning for Asset Transfers between Divorcing Clients
  • Splitting up Assets Held in Taxable Investment Accounts
  • Tax-Free Post-Divorce Transfers Must Be Incident to Divorce
  • Beware of Investments with Accrued Ordinary Income
• Tax-Smart Divorce Strategies for Homes
  • Sale before Divorce
  • Sale in Year of Divorce or Later
  • When Nonresident Ex-Spouse Still Owns Home Long after Divorce
  • Vacation Homes
• Splitting up Vested Employer Stock Options in Divorce
  • Federal Income and Gift Tax Consequences
  • Federal Employment Tax Consequences
• Splitting up Business Ownership Interests in Divorce
  • Redemption of C Corporation Stock
• Splitting up Tax-Advantaged Retirement Accounts in Divorce
  • How to Split up Qualified Retirement Plan Accounts
  • How to Split up Traditional IRAs, Roth IRAs, and SEP Accounts
  • Procedural Strategies for Traditional IRAs, Roth IRAs, and SEP Accounts
• Structuring Payments to Qualify as Deductible Alimony
  • Tax-Law Requirements for Deductible Alimony
  • Written Instrument
  • Cash or Cash Equivalent
  • Payment to Third Parties
  • Requirement That Payments Must Cease after Payee’s Death
  • Payments Considered to Be for Child Support
  • Alimony Recapture Rules
• Summary
• Questions
• Chapter 5 - Maximizing Retirement Plan Benefits
• Learning Objectives
• Introduction
• Small Business Retirement Plan Basics
• Solo or Family 401(k) Plan
• Simplified Employee Pension (SEP)
  • SEP Pros
  • SEP Cons
  • Conclusion on SEPs
• Defined Contribution Keogh and Corporate Profit-Sharing Plans
  • Pros for These Plans
  • Cons for These Plans
  • Conclusion on These Plans
• SIMPLE-IRA
  • SIMPLE-IRA Pros
  • SIMPLE-IRA Cons
  • Conclusion on SIMPLE-IRAs
• Defined Benefit Pension Plan
  • Defined Benefit Plan Pros
  • Defined Benefit Plan Cons
  • Conclusion on Defined Benefit Plans
• Solo 401(k) Plan
  • Solo 401(k)’s Advantage Shrinks at High Income Levels
  • Solo 401(k) Mechanics
  • Solo 401(k) Pros
  • Solo 401(k) Cons
  • Conclusion Regarding Solo 401(k) Plans
• Family 401(k) Plan When Business Owner Also Employs Other Family Members
  • Family 401(k) Mechanics
  • Family 401(k) Pros
  • Family 401(k) Cons
  • Conclusion on Family 401(k) Plans
• Overall Conclusions on Small Business Retirement Plans
• Planning for Retirement Account Rollovers
  • Avoid 20% Withholding Rule
  • Liberalized Rollover Rules
• Appropriate Asset Allocation Strategies for Retirement Accounts
• Impact of Rate of Return
  • Relationship between Investment Risk and Asset Allocation
  • Sample Asset Allocation Strategies
  • Laddered Approach to Asset Allocation
• Sample Filled-Out Retirement Planning Worksheets
  • Worksheet No. 1: Projected Income from Current Retirement Savings plus Pension and Social
  • Security Benefits
  • Worksheet No. 2: Projected Retirement-Age Living Costs
  • Worksheet No. 3: Is Client Financially Set for Retirement or (More Likely) Are Additional Savings Required?
• Summary
• Question
• Chapter 6 - How to Handle Retirement Account Required Minimum Withdrawals
• Learning Objectives
• Introduction
• Part 1 – Required Minimum Withdrawals for Original Account Owners
  • Required Minimum Withdrawal Basics
  • Scenario 1: Account Owner Turns 70½ This Year; Takes First Required Minimum Withdrawal This Year
  • Scenario 2: Account Owner Turns 70½ This Year; Takes First Required Minimum Withdrawal Next Year
  • Scenario 3: Account Owner Turned 70½ Last Year; Took First Required Minimum Withdrawal Last Year
  • Scenario 4: Account Owner Turned 70½ Last Year; Takes First Required Minimum Withdrawal This Year
  • Scenario 5: Original Account Owner’s Much-Younger Spouse Is Named as Sole Account
  • Beneficiary
  • Scenario 6: Multiple IRAs
  • Qualified Charitable Distributions
• Part 2 – Required Minimum Withdrawals When Surviving Spouse Inherits Account
  • Scenario 1: Spouse Dies before April 1st of Year after Turning 70½ (or Any Earlier Date)
  • Scenario 2: Spouse Dies on or after April 1st of Year after Turning 70½
  • Scenario 3: Surviving Spouse Inherits Roth IRA
  • Scenario 4: Estate or Trust Is Sole Account Beneficiary and Surviving Spouse Is Sole
• Beneficiary of Estate or Trust
• Part 3 – Required Minimum Withdrawals When Non-Spouse Inherits Account
  • Scenario 1: Account Owner Dies before April 1st of Year after Turning 70½ (or Any Earlier
  • Date)
  • Scenario 2: Account Owner Dies on or after April 1st of Year after Turning 70½
  • Scenario 3: Beneficiary Inherits Account from Original Account Owner’s Spouse
  • Non-Spousal Rollover Rules
• Part 4 – Required Minimum Withdrawals in Special Circumstances
  • Scenario 1: No Designated Account Beneficiary
  • Scenario 2: Multiple Account Beneficiaries
  • Scenario 3: Beneficiary Wants to Disclaim Share of Inherited Account
  • Scenario 4: Removing a Non-Individual Beneficiary
• Part 5 – The “Stretch IRAâ€? Strategy in Plain English
  • Stretch IRA Basics
  • The Stretch Roth IRA Strategy
• Summary
• Questions
• Chapter 7 - Simple and Easy Estate Planning Strategies
• Learning Objectives
• Introduction
• The Federal Gift and Estate Tax System in a Nutshell
  • Federal Estate Tax Basics
  • Federal Gift Tax Basics
  • Putting the Pieces Together
• Estate Planning Basics
• Step 1: Draft Will or Living Trust Instrument
  • The Will
  • The Living Trust
  • Wills and Living Trusts Are Not Cure-Alls
• Step 2: Implement Estate-Tax-Avoidance Strategies
  • Use Will or Living Trust to Avoid Estate Tax Hit
  • Use Bypass Trust to Avoid Estate Tax Hit
  • Smaller Estates, Bigger Estates, and Singles
  • Use QTIP Trust to Avoid Estate Tax Hit
  • Use Life Insurance Trust to Avoid Estate Tax Hit
  • Use Marital Trust for Non-Tax Reasons
  • Estate Plans Are Moving Targets
• Assessing Client's Estate Tax Exposure
• Estate Planning with Roth IRAs
• Estate Planning with Section 529 Accounts
• Transferring Parent's Home to an Adult Child
  • Outright Gift of Home
  • Bargain Sale of Home
  • Full-Price Sale with Parental Financing
  • When Parent Wants to Continue Occupying the Home
  • Transfer to Qualified Personal Residence Trust
  • Post-Mortem Transfer Could Be Best Deal of All
• Qualified Disclaimer Can Be Effective Estate Planning Tool
• Summary
• Questions
• Chapter 8 - Ethics Focus: Taxation
• Ethics Overview
• Recent Developments
• Spotlight on Independence in Tax Services
• Key Ethical Dilemmas and Judgment Calls
• Addressing Ethical Dilemmas
• Available Resources
• Chapter 9 - Latest Developments

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