Essential Legal Concepts with Tax Analysis

Upon successful completion of this course, participants will be able to:

Chapter 1

• Identify the goals and purposes of asset protection recognizing the objections some people have about shielding assets from creditors, cite reasons for asset protection, situations that can expose assets, and the primary concepts of insurance, asset placement, and statutory protections.
• Recognize the importance of creditor types associated with asset protection and differentiate fraudulent transfer laws.
• Identify the degree and necessity of asset protection using net worth and asset values under a balance sheet and the various ways that insurance can offer asset protection.
• Recognize the asset protection advantages and disadvantages of ownership formats and entities by identifying the protection given by corporations, partnerships, and trusts.

Chapter 2

• Recognize how the tax treatment of spousal support payments has dramatically changed under the TCJA, identify the §71 requirements for pre-2019 decree alimony, and differentiate the tax treatment with current law.
• Identify the tax treatment of child support and circumstances where a payment will be fixed as child support, and specify events that determine whether a contingency is clearly child-related and how to rebut this presumption of child support.
• Recognize the COBRA and qualified medical child support order rules by:
• Identifying whether COBRA rules apply to different plans including notice & deadline requirements and specifying situations that may result in a termination of continuing coverage; and
• Determining what constitutes “qualified medical child support orders” recognizing differences with other similar orders and identifying the procedures, requirements, and jurisdiction of QMCSOs.

Chapter 3

• Determine how the 2005 Bankruptcy Act changed procedures, qualifications, and tax law, and identify the most common bankruptcy types and their influence on how an individual or business “goes bankrupt.”
• Specify the rules for automatic stay and levy along with their impact on “freezing” creditor activity, tax assessment, and collection.
• Identify the differences between preferential and nonpreferential payments together with 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 and special garnishment rules.

Chapter 4

• Identify premarital agreement and post-nuptial including how they relate to divorce settlements and cite the position of U.S. v. Davis on interspousal transfers and the changes made by §1041 specifying the requirements of §1041.
• Identify factors that determine when a property transfer is incident to divorce and recognize the application of §1041 to transfers in trust under §1041(e).
• Determine deferred tax liability and property basis for the transferor spouse and transferee spouse under §1041 after a property settlement, recognize the application of §1041 to transfers of encumbered property, and identify appropriate records and notices for transferred assets.
• Identify the dangers of purchasing a former spouse’s interest in property, particularly a marital residence including its tendency to create deferred tax liability, and specify the effects of purchasing assets used in a business or held for investment.
• Recognize sale, redemption, recapitalization, liquidation, and third-party transfers as methods of dividing a business in a marital settlement and specify the use of insurance to protect support.
• Identify an overall tax and economic strategy for the division of pension benefits in a marital settlement by specifying popular methods of dividing retirement benefits in a divorce.

Chapter 5

• Specify common-law rules used to determine employee status, identify unreasonable compensation issues, and recognize the mechanics of the Social Security system by determining how the system works, who qualifies, and when such participants are eligible for benefits
• Identify Social Security taxes, their rates, and covered earnings to determine actual amounts taken from gross pay.
• Determine Medicaid and Medicare differences and what is needed to qualify, and identify the eligibility requirements of Social Security disability and survivors’ benefits.

Chapter 6

• Identify tax and legal title formats recognizing the distinctions among these entity formats by determining the advantages and disadvantages of holding property individually, through a sole proprietorship, or a corporation along with associated pitfalls.
• Cite the partnership tax advantages and disadvantages, particularly those associated family limited partnerships, and identify the types of retirement plans used to provide benefits to business owners and employees,

Chapter 7

• Identify characteristics of homeowner’s, automobile, and disability insurance and what asset protection they may offer.
• Specify the benefits, uses, and types of life insurance and identify variables that influence when life insurance is taxable.
• Determine what constitutes an annuity and the types and characteristics of annuities along with their tax advantages and disadvantages.
• Identify entity purchase and cross-purchase agreements specifying tax and legal advantages and pitfalls.

Chapter 8

• Identify capital gains rates with applicable assets using the “basket” approach and cite the elements of the §121 home sale exclusion.
• Recognize the installment method rules and regulations related to using this method by identifying basic terminology, determining the tax treatment of contingent payments, dealer dispositions, obligation pledging, and §483 imputed interest.
• Identify the mechanics of a §1031 like-kind exchange by recognizing the advantage of §1031 as a tax deferral device naming at least three elements of an exchange and specifying related parties and conditions where they may sell or dispose of properties, and recognizing the requirements of a delayed exchange.
• Determine gain or loss on foreclosure or repossession identifying reporting and filing requirements including the impact of recourse and nonrecourse debt.
• Recognize the differences between personal property and real property repossessions, tax treatment of gain or loss, and determine basis and repossession costs.
• Identify the tax treatment of an involuntary conversion by recognizing related terminology, the tax consequences of receiving a condemnation award or severance damages, and the related party rule under §1033.

Chapter 9

• Recognize the benefits of retirement plans and effective design following a multi-step program.
• Identify qualified corporate plans, SIMPLE plans, self-employed plans, IRAs, and tax-deferred annuities.
• Determine the differences between nonstatutory and statutory fringe benefits, identify working condition fringes, and de minimis fringes, and specify the requirements of §79, §125, and §105 plans.
• Identify valuation methods for employer-provided automobiles and specify ERISA plan compliance requirements.

Chapter 10

• Identify types of tort and the remedies tort law provides.
• Recognize the personal injury exclusion to ensure proper reporting of damages received because of injury, and determine how to report punitive damages, interest on injury awards, and legal fees as determined according to case law.

Chapter 11

• Specify types of wills and the functions a will can perform and recall ways to hold title and their tax ramifications.
• Identify the advantages of a properly drafted will, determine the distribution flow of simple wills, and specify the pros and cons of probate proceedings.

Chapter 12

• Identify the relationship of parties in a trust, reasons to establish a trust, and types of trusts along with their estate planning function.
• Specify recommended living trust provisions and identify the use of grantor trusts including a grantor retained income trust.