Making The Best of Bad Situations

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

Chapter 1

• Specify the factors used to determine federal filing status and the effects of filing as married or unmarried.
• Identify the requirements for filing a joint return and how to avoid being penalized.
• Determine the key elements of filing separate returns including what items to report and identify whether or not married taxpayers should file separate returns.
• Cite the requirements for filing as head of household and the tax advantages and disadvantages of this filing status.
• Recognize the repeal of personal & dependency exemptions, their former phaseout, availability, and reporting requirements.
• Differentiate custodian and noncustodian parent, identify the dependency determination impact, determine the current “qualified child” standard using residency, and identify requirements that must be met for parents to treat a child as a qualifying child of a non-custodial parent.
• Identify deductible and nondeductible divorce expenditures specifying which spouse is subject to tax imposed upon withheld wages, and recognize the effects of making separate estimated tax payments or joint declarations of estimated tax.
• Determine community property and the community property states, identify the effects of conversion and commingling of property, and how to avoid such marital property issues.
• Identify community income earned by married couples for reporting purposes, recognize the allocation of income when spouses have different residences, specify the requirements for the special community income allocation rules of §66(a), and determine the treatment of alimony payments versus community share.
• Identify the effect of living together on filing statuses and dependency, recognize the tax consequences of having a living together contract to avoid tax traps, and specify the results of Marvin v. Marvin.

Chapter 2

• Identify types of marital property and their likely division, specify the legal principles used in dividing assets and providing support and determine the benefits of premarital agreements and the requirements and permissible provisions for a valid and comprehensive marital agreement.
• Specify the position of U.S. v. Davis on interspousal transfers and the changes made by §1041, identify the requirements of §1041 and the scope of its application, determine whether a property transfer is incident to divorce, and identify 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 and 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 the obligation to supply basis information and recognize 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, identify the use of a §1031 exchange to dispose of low-basis property received in a §1041 transfer, specify common disposition alternatives available on divorce, and identify the home sale exclusion requirements.
• Recognize sale, redemption, and third-party transfers as methods of dividing a business citing unique provisions under §736, identify whether gain or loss on a sale of real or personal property is capital or ordinary, and recognize the role and tax treatment of life insurance in property settlements.
• Specify popular methods of dividing private and military retirement benefits in a divorce or separation action identifying the requirements and tax consequences of a “qualified domestic relations order (QDRO).

Chapter 3

• 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 and specifying situations that may result in termination of continuing coverage and determine what constitutes a “qualified medical child support order” recognizing the procedures, requirements, and jurisdiction of QMCSOs.

Chapter 4

• Recognize the effect that debt cancellation has on net worth and potential income inclusion from cancellation of indebtedness income, and specify exceptions to the general income inclusion rule and their tax impact.
• Identify tax attribute reductions and their application when reducing canceled debt, determine gain or loss resulting from foreclosure or repossession, specify the timing and character of the gain or loss, and cite the hidden income tax danger when acquiring one’s own debt at a discount.

Chapter 5

• Identify the character of gain or loss on repossession of property sold under the installment and the non-installment methods and determine the value of repossessed property upon judicial sale.
• Determine adjusted basis on repossession and identify limits on taxable gain under §1038.

Chapter 6

• Determine bad debt categories and their tax treatment and recognize the reporting of bad debt losses.
• Identify the qualifications for §166 tax treatment of business bad debt specifying the debt’s relationship to business and the potential creation of a net operating loss.