This comprehensive book describes and compares sole proprietorships, partnerships, limited liability companies, “C” corporations, and “S” corporations. It examines their advantages and disadvantages, permitting the reader to properly select the right business entity for their tax and liability needs. Major emphasis is given to the maximization of tax benefits in each business format. Fringe benefits, retirement plan alternatives, and nonqualified deferred compensation are discussed in detail.

Chapter 1 – Sole Proprietorship
At the start of Chapter 1, participants should identify the following topics for study:
* Advantages & disadvantages
* Formation
* Schedule C
* Self-employment tax
* Estimated tax
* Sale of a business
* Classification of assets
* Other business dispositions
* Income splitting
* Estate planning
Learning Objectives
After reading Chapter 1, participants will be able to:
1. Determine the elements associated with sole proprietorships, and specify the tax reporting requirements.
2. State the ordinary and necessary business deduction test under §162, identify not-for-profit activities, differentiate income tax rates for sole proprietorships versus other entities, and recall profit reinvestment limitations.
3. Recognize the taxes imposed on self-employed persons and state the possible S corporation solution, identify the quarterly reporting of estimated taxes, determine how sole proprietorship assets are characterized on disposition, and identify income splitting and estate planning devices available for such business owners.
After studying the materials in Chapter 1, answer exam questions 1 to 14.

Chapter 2 – Partnerships
At the start of Chapter 2, participants should identify the following topics for study:
* Definition of partnership
* Partners taxed as individuals
* Partnership tax return
* Year taxable
* Transactions between partner & partnership
* Contributions of property
* Inside basis of contributed assets
* Basis of partner’s interest – outside basis
* Sales & exchanges of partnership interests
* Partnership distributions
Learning Objectives
After reading Chapter 2, participants will be able to:
1. Determine the tax treatment of family and publicly traded partnerships, including the special benefits of family partnerships, and specify the partnership exclusion requirements and the tax treatment of partnership expenses paid by a partner.
2. Recognize the relationship of deductions to outside basis, how outside bases can be increased, partnership filing requirements, and failure to file penalties, identify the allocation timing of partnership income and deductions, and state the limitations on the choice of a taxable year.
3. Identify types of transactions between a partner and the partnership that can influence the treatment of the transaction, and specify the character of property contributions under §721.
4. Determine inside and outside basis, including complications caused by the contribution of services, specify their interplay with the at-risk rules, their impact on the disposition of partnership interests, and their effect on partnership distributions.
After studying the materials in Chapter 2, answer exam questions 15 to 31.

Chapter 3 – Limited Liability Companies
At the start of Chapter 3, participants should identify the following topics for study:
* Advantages of LLCs over C corporations
* Advantages of LLCs over S corporations
* Advantages of LLCs over limited partnerships
* Advantages of LLCs over general partnerships
* Disadvantages
* Uses
* Federal tax consequences
* Conversion to LLCs from other entities
* Local taxes on conversion
* California Limited Liability Company Act
Learning Objectives
After reading Chapter 3, participants will be able to:
1. Identify the elements of limited liability companies (LLCs) that distinguish them from other entities, particularly C corporations, and specify the benefits of an LLC and their effect on choosing a form of entity.
2. Cite reasons for choosing an LLC over S corporations, limited partnerships, and general partnerships, and, in contrast, determine the drawbacks of LLC entity selection.
3. Identify several ways to use the LLC form effectively and thereby fit client objectives and expand business-planning opportunities.
4. Recognize the varying tax consequences of forming or converting to an LLC, including possible tax differences using the California Limited Liability Company Act.
After studying the materials in Chapter 3, answer exam questions 32 to 46.

Chapter 4 – Corporations
At the start of Chapter 4, participants should identify the following topics for study:
* Corporation defined
* PSC corporations
* Incorporation
* Small business stock exclusion
* Start-up & organizational expenses
* Alternative minimum tax
* Capital gains & losses
* Accumulated earnings
* Accounting periods & methods
* Inventories
Learning Objectives
After reading Chapter 4, participants will be able to:
1. Determine a “corporation,” for tax purposes, and identify regular corporations from other entities.
2. Identify “personal service corporations” and small business investment companies, including their requirements & tax treatment, and
recognize the transfer of money, property, or both by prospective shareholders to a corporation under §351.
3. Specify the requirements of §1244 stock and the small business stock exclusion, and determine the differences between start-up expenses and organizational expenses.
4. Identify corporate pitfalls and dangers, citing tax recognition of the entity, tax rates, AMT repeal, capital gains & losses under §1212, and the dividends received deduction under §243.
5. Specify necessary corporate action for making allowable corporate charitable contributions and avoiding tax penalties under §541 and §531, and identify the treatment and impact of tax-exempt income, accounting methods, and consolidated returns.
After studying the materials in Chapter 4, answer exam questions 47 to 68.

Chapter 5 – S Corporations
At the start of Chapter 5, participants should identify the following topics for study:
* Advantages & disadvantages
* S corporation status
* Termination
* Income & expense
* Built-in gain
* Passive income
* Basis of stocks & debts
* Distributions
* Form 1120S
* Fringe benefits
Learning Objectives
After reading Chapter 5, participants will be able to:
1. Determine what constitutes an S corporation and specify the advantages and disadvantages associated with it.
2. Identify variables that impact whether a business can choose or continue S corporation status, ways that an S corporation may be terminated, and the related procedures that must be followed.
3. Recognize S corporation tax treatment, including special areas involving income and expenses and built-in gain.
4. Identify cash basis related party rules, fringe benefit limitations, and the application of the chameleon rule.
After studying the materials in Chapter 5, answer exam questions 69 to 80.

Chapter 6 – Basic Fringe Benefits
At the start of Chapter 6, participants should identify the following topics for study:
* Benefit mechanics
* Employee achievement awards
* Group term life insurance
* Self-insured medical reimbursement plans
* Medical insurance
* Meals & lodging
* Cafeteria plans
* Employer-provided automobile
* Adoption assistance program
* Interest-free & below-market loans
Learning Objectives
After reading Chapter 6, participants will be able to:
1. Recognize basic fringe benefit planning by specifying “income” under §61, determine statutory fringe benefits under tax law, identify the fair market value of a fringe benefit under the general and special valuation rules, and cite the special two-month pour-over accounting rule.
2. Specify the rules for §79 group term life insurance, specifying how to implement proper coverage and report excess coverage, recognize the mechanics of §105 self-insured medical reimbursement plans, identify the §119 rules for excluding the value of meals and lodging, and determine what constitutes a “cafeteria plan.”
3. Identify the requirements and limits of employee educational assistance programs and dependent care assistance, determine excludable income from qualified employee discounts under §132(c) and de minimis fringes, specify valuation methods for employer-provided automobiles, and identify the requirements and benefits of adoption assistance programs.
4. Recognize the wage and salary treatment of moving expense reimbursements, and identify ERISA compliance requirements of welfare benefit plans.
After studying the materials in Chapter 6, answer exam questions 81 to 99.

Chapter 7 – Retirement Plans
At the start of Chapter 7, participants should identify the following topics for study:
* Qualified deferred compensation
* Basic requirements of a qualified pension plan
* Basic types of corporate plans
* Types of defined contribution plans
* Self-employed plans – Keogh
* Distribution & settlement options of IRAs
* Tax-free rollovers for IRAs
* Roth IRAs
* Simplified employee pension plans (SEPs)
* SIMPLE Plans
Learning Objectives
After reading Chapter 7, participants will be able to:
1. Specify the compensation base for qualified plan contributions, cite the classification of qualified retirement plans, including profit-sharing and defined contribution plans, and identify the application of PBGC insurance to qualified plans.
2. Specify the requirements of the basic forms of qualified pension plans, identify basic qualified plans specifying their effect on retirement and death benefits, recognize the tax impact of employee voluntary contributions, and state the 10-year termination rule.
3. Determine the differences between self-employed and qualified plans for other business types, identify the impact of controlled businesses, specify the requirements and limits of IRAs, identify tax-free Roth IRA distributions, and cite the coverage requirements for SEPs.
After studying the materials in Chapter 7, answer exam questions 100 to 117.

Chapter 8 – Nonqualified Plans
At the start of Chapter 8, participants should identify the following topics for study:
* Postponement of income
* Purposes & benefits
* Constructive receipt
* Economic benefit
* Funded company account plan
* Segregated asset plan
* Tax consequences
* Accounting
* Estate planning considerations
* Withholding, Social Security & IRAs
Learning Objectives
After reading Chapter 8, participants will be able to:
1. Identify the advantages of nonqualified deferred compensation, recognize incentive nonqualified compensation, and determine “constructive receipt” and “economic benefit.”
2. Specify the various methods to fund a nonqualified deferred compensation plan and identify the basic accounting methods associated with nonqualified plans.
After studying the materials in Chapter 8, answer exam questions 118 to 125.

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.

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