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.
Assignment
At the start of the materials, participants should identify the following topics for study:
* Indebtedness
* Deductible interest & mortgage interest
* Investment interest
* Nondeductible interest
* Personal interest & capitalized interest
* At-risk rules
* Passive activity limitations
* Below-market interest rate loans
* Imputed interest on sales
* Original issue discount (OID)
Learning Objectives
After reading the materials, participants will be able to:
1. Determine “interest” and select how much is tax deductible under §163 by recognizing incentives to use corporate debt instead of equity and the special treatment of failed equity investment under §1244 and identifying bona fide debt from installment sales.
2. Identify deductible interest and related special calculation concepts and determine net investment income including its impact on the deductibility of investment interest.
3. Recognize when interest is nondeductible personal interest under §163(h)(1) and determining the disallowance of interest related to the §465 at-risk limitations and application of the §469 passive loss rules
4. Identify interest under the cash or accrual method recognizing the special elections applicable and the treatment of §7872 loans.
To complete this course participants need to: Read the material provided and answer chapter review questions, successfully complete the qualified assessment with a minimum of 70% accuracy to receive your certificate. In Addition, no correct or incorrect feedback for any exam question will be provided.
Upon course completion A course evaluation form is provided for your feedback.
Participants have 1 year from the date of purchase/enrollment to complete this course
CPE Prime 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 final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org