This course covers tax implications of bad situations like divorce, bad debt, foreclosures, and more. It will teach participants how to apply, implement, and evaluate the strategic tax aspects of marital dissolutions and living together arrangements. Current perspectives on property transfers, asset divisions, alimony, filing status, exemptions, and child support are examined with an emphasis on planning considerations. The cancellation of indebtedness income inclusion rules are examined in the context of debt forgiveness and property foreclosure. Emphasis is given to the exceptions from income inclusion contained in section 108. The tax treatment of property repossession under section 1038 is explored with detail given to the calculation of gain and received property basis. Finally, bad debt treatment under section 166 is reviewed and critical distinctions made between business and non-business debts.
Delivery Method: Online Interactive Self Study
Prerequisites: General understanding of federal income taxation.
Advanced Preparation: None
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Author: Danny Santucci
Field of Study: Taxes
Passing Score: 70%
Publication Date: 04/04/2017
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Chapter 1: Basic Marital Tax Matters
1. Specify multiple tax implications to consider when going through a divorce, and recognize the requirements and effects of filing as married or unmarried.
2. Identify the requirements of filing a joint return noting how to avoid being penalized.
3. Determine the key elements of filing separate returns including what items to report and identify whether or not married taxpayers should file separate returns.
4. Recall the requirements for filing as head of household and the tax ad-vantages and disadvantages of this filing status.
5. Recognize the phaseout of exemptions noting its effects on taxpayers, identify when exemptions can be taken for spouses, and determine re-porting requirements for dependent exemptions, and specify the requirements for pre-2005 dependency particularly relationship, married person, citizen or resident and income.
6. Identify the former regular and special method for determining support noting complications from back child support, determine the current "qualified child" standard using residency, relationship, age, and joint re-turn prohibition, and recall the requirements that must be met for parents to treat a child as a qualifying child of a non-custodial parent.
7. Identify deductible and nondeductible divorce expenditures noting 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.
8. Determine community property and community property states, and identify the effects of conversion and commingling of property and how to avoid such marital property issues.
9. Identify community income earned by married couples for reporting purposes by:
a. Specifying reporting guidelines, recognizing the allocation of income earned and received into community property and separate property and selecting what income and property belongs to which spouse when they have different residency statuses;
b. Recalling the requirements for the special community income allocation rules of section 66(a), determining what constitutes community property termination and specifying the treatment of alimony payments; and
c. Recognizing the use of statements and records to provide estimates of a former spouse's income and identifying conditions for greater tax relief.
10. Identify the effect of living together on filing statuses and dependency, determine differences between the married tax rate and other tax rates, recognize the tax consequences of having a living together contract to avoid tax traps, and specify the results of Marvin v. Marvin.
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