Author: Danny Santucci, JD
Electronic version only
This course focuses on tax issues affecting the treatment of interest and debt. It covers the definition of bona fide debt, the impact of related parties, the avoidance of equity and lease characterization, and deductible versus nondeductible interest factors. Sticky cross issues such as the impact of at-risk rules under §465, passive loss restrictions of §469, and below-market rate loans under §7278 are examined. In addition, the accounting method treatment of interest, points, prepaid interest, and discounted loans are reviewed. Particular attention is given to imputed interest and original issue discount.
With this two-hour course, you will:
- Get a 68-page PDF document
- Determine “interest” and select how much is tax deductible under §163 by:
- Identifying what constitutes bona fide debt considering economic substance and purpose and the differences that such debt has from installment sales, long-term & leveraged leases, and annuities
- Specifying how transactions with family members and controlled corporations can recharacterize alleged indebtedness into gift or business equity naming the factors used in this recharacterization and
- Recognizing incentives to use corporate debt instead of equity and the special treatment of failed equity investment under §1244
- Identify deductible interest and special calculation concepts and procedures by:
- Recognizing the allocation of interest based on the debt’s business or personal purpose specifying the application of any carryover rules
- Determining net investment income including its impact on the deductibility of investment interest
- Recognizing the special tax treatment given to student loans, margin accounts, and market discount bonds stating what happens to any disallowed interest expense
- Specifying the timing considerations in interest reporting including interest paid in advance
- Recognize nondeductible interest types and provisions that through restriction create nondeductible interest by:
- Identifying when interest is nondeductible personal interest under §163(h)(1)
- Determining the disallowance of interest related to tax-exempt income under §265, the life insurance interest restrictions of §264; the §465 at-risk limitations and application of the §469 passive loss rules
- Specifying the treatment of certain commitment fees and service charges based on R.R. 67-297 and caselaw
- Identify interest under the cash or accrual method recognizing the special elections applicable to and treatment of carrying charges under §266, below-market loans, and imputed interest
|EA||2 Federal Tax|
|CRTP (CTEC)||2 Federal Tax|
|Attorney||1.5 General MCLE|
Course level: Overview
General understanding of federal income taxation.
ATTENTION CRTPs (CTEC): In order for your course to be reported in the registration period ending Saturday, October 31, 2020, your exam must be submitted no later than 4:00 p.m. Pacific Time on Friday, October 30, 2020. Any exams submitted after that time will not be reported until Monday, November 2, 2020.
Want to order by phone? Call us at: (714) 776-7850
This self-study is designed to meet the requirements for the specified number of hours of continuing education. This self-study has been designed to meet the requirements of the IRS Return Preparer Office; including sections 10.6 and 10.9 of Department of Treasury’s Circular No. 230 (Provider No. CRA7E); the California State Board of Accountancy; the California Bar Association; and the California Tax Education Council. This does not constitute an endorsement by these groups. The state boards of accountancy have final authority on the acceptance of individual courses for CPE credit. For more information regarding administrative policies such as complaints or refunds, contact Spidell Publishing at 714-776-7850. Spidell Publishing, Inc. has been approved by the California Tax Education Council to offer continuing education courses that count as credit towards the annual “continuing education” requirement imposed by the State of California for CTEC Registered Tax Preparers. A listing of additional requirements to renew tax preparer registration may be obtained by contacting CTEC at P.O. Box 2890, Sacramento, CA 95812-2890, or by phone at 877-850-2832, or on the internet at www.CTEC.org.
Spidell Publishing, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State Boards of Accountancy have the final authority on the acceptance of individual course for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. This self-study is designed to meet the requirements for 2 hours of continuing education for the California Board of Accountancy. Level: Overview. Field of Study: Taxes. Delivery Method: Self-Study. For more information regarding administrative policies, such as complaints or refunds, contact Spidell Publishing at (714) 776-7850. General understanding of federal income taxation is required.