Learning Objectives
As a result of studying each assignment, you should be able to meet the objectives listed below each assignment.
ASSIGNMENT SUBJECT
Chapter 1 Tax Economics
At the start of the chapter, participants should identify the following topics for study:
* Financial fundamentals and tax planning elements
* Taxable income
* Tax-free income
* Tax-deferred income
* Tax-sheltered income
* Budgeting
* Cash
* Acquisition
* Assets
* Management
Learning Objectives
After reading chapter 1, participants will be able to:
1. Analyze building an estate, preserving wealth and distributing assets in the context of financial fundamentals and tax planning elements.
2. Explain and provide examples of the four types of income, from a financial and tax perspective, to be budgeted into cash so that income-producing assets can be acquired and managed for an effective investment plan.
3. Describe at least five types of fringe benefits that employers can provide to employees tax-free.
4. Delineate four basic budget rules, four ways that cash can be used, six basic guidelines that should be applied when purchasing assets and six basic management rules.
ASSIGNMENT SUBJECT
Chapter 2 Installment Sales & Time Value of Money
At the start of the chapter, participants should identify the following topics for study:
* Installment method
* Imputed interest
* OID
* Real property sales & casual sales of personality
* Related party sales
* Like-kind exchanges
* Contingent payments or price
* Dealer dispositions
* Installment obligations in excess of $5 million
* Dispositions of installment obligations
Learning Objectives
After reading chapter 2, participants will be able to:
1. Clarify the importance of the installment method, locate at least three requirements set forth in §453 to determine whether the installment method may be used, and define basic terminology associated with using the installment method.
2. Apply §483 (imputed interest rules) and §§1271 through 1274 (original issue discount rules) on installment sales.
3. Evaluate the rules associated with real property sales and casual sales of personality, the superstructure of provisions associated with the related party rules of §453 and the exceptions that override basic installment planning.
4. Describe how the contingent payment sales have changed due to the Installment Sales Revision Act of 1980, discuss other contingent payment rules, and identify circumstances when dispositions of installment obligations occur.
ASSIGNMENT SUBJECT
Chapter 3 Mortgage Finance
At the start of the chapter, participants should identify the following topics for study:
* Mortgage costs
* Interest deduction
* Interest-free & below-market rate loans
* Imputed interest & OID
* Shared appreciation mortgages
* Tax treatment overview
* Types of equity participation debt
* Tests to determine what constitutes interest
* Option & conversion rights
* Convertible indebtedness
Learning Objectives
After reading chapter 3, participants will be able to:
1. Clarify mortgage financing, identify two advantages and one major disadvantage of mortgage financing, and amortize mortgage costs appropriately.
2. Define interest using Deputy v. DuPont, 308 U.S. 488, and outline the key aspects of personal interest, investment interest, prepaid interest, and points.
3. Explain interest-free or below-market interest rate loans and how they relate to lenders’ interest income and borrowers’ interest paid under §7872.
4. Spot long-term financing techniques and six characteristics of a shared appreciation mortgage and their bearing on lenders and borrowers.
5. List three basic tests that determine what constitutes interest and their effect on the tax treatments of equity participation, and discuss equity participation debt and where changes may be necessary in tax planning.
ASSIGNMENT SUBJECT
Chapter 4 Home Sales & Like-Kind Exchanges
At the start of the chapter, participants should identify the following topics for study:
* Home sales under §121
* Special rules for ownership & use requirements
* Prorata exception
* Three elements of like-kind exchanges
* Related party exchanges
* Like-kind requirement for personal property
* Multiple asset exchanges
* Identification requirements for delayed exchange regulations
* Actual & constructive receipt rule for delayed exchange regulations
* Exchanges of partnership interests
Learning Objectives
After reading chapter 4, participants will be able to:
1. Outline the key elements of the $500,000 home sale exclusion and how to apply it, and apply the three safe harbor regulations associated with the home sale exclusion.
2. List and explain the advantages of exchanges, three basic requirements and at least three basic types of true exchanges under §1031, and analyze the rules of boot and their effect on like kind exchanges.
3. Interpret the regulations for related party exchanges, foreign real property exchanges and personal and multiple property exchanges, and clarify the codification systems and how they relate to exchanged depreciable tangible properties.
4. Apply the regulations for delayed (deferred) exchanges, spot four safe harbors that can be used without risk of actual or constructive receipt, and differentiate between partnership interests that may be exchanged under §1031 and those that may not.
ASSIGNMENT SUBJECT
Chapter 5 Involuntary Conversions
At the start of the chapter, participants should identify the following topics for study:
* Threat of condemnation
* Property voluntarily sold
* Easements
* Condemnation award
* Severance damages
* Special assessment withheld from an award
* Gain or loss from condemnations
* Postponement of gain
* Replacement period
* Related party rule
Learning Objectives
After reading chapter 5, participants will be able to:
1. Define condemnations and involuntary conversions under §1033 and analyze their impact on the recognition of gain or loss.
2. List four variables of a condemnation award and their effect on income and the cost of newly acquired property.
3. Define severance damages and explicate the complexity of their treatment.
4. Apply the rules on the reporting of payments associated with involuntary conversions, summarize gain postponement choices, and explain the related party rule.
ASSIGNMENT SUBJECT
Chapter 6 Passive Loss & At-Risk Rules
At the start of the chapter, participants should identify the following topics for study:
* Passive loss rules
* Material participation
* Activity definition
* Passive & nonpassive activities
* Passive activity loss
* Rental activities
* Recharacterization of passive income
* Passive activity credits
* Passive activity audit guide
* At-risk limits
Learning Objectives
After reading chapter 6, participants will be able to:
1. Identify the two basic type of income and the three “buckets” of income and loss under §469 that can control what a taxpayer can deduct against other income.
2. Explain the suspension of disallowed losses and how it relates to passive losses, and apply the special rules for six types of transfers that are not deemed to be fully taxable dispositions.
3. Identify taxpayers subject to §469 and determine whether clients fall into one of the categories of taxpayers who are subject to the passive loss rules.
4. List three ways that a taxpayer can avoid having an activity become subject to the passive loss limits and describe the requirements for each, and clarify what is affected by §469 and the limitations of credits and losses from passive activities.
5. Define an activity and passive activity loss, summarize the treatment of carryover losses and the allocation process, characterize gain from the exchange, sale or other disposition of an interest in property used in an activity or held through a partnership or S corporation, and explain the special rule for rental real estate.
6. Sum up the two types of recharacterization rules under the regulations, figure passive activity credits, explain the benefits and uses of the passive activity audit guide, and clarify the impact of the at-risk limit rules.
ASSIGNMENT SUBJECT
Chapter 7 Sales by Foreign Investors
At the start of the chapter, participants should identify the following topics for study:
* FIRPTA
* United States real property interests
* United States property holding corporations
* Exceptions to U.S. property holding corporations
* Foreign corporations
* Distributions
* Withholding & reporting requirements
* Non-foreign affidavit
Learning Objectives
After reading chapter 7, participants will be able to:
1. Apply the requirements of Foreign Investment in Real Property Tax Act of 1980, define a United States real property interest using §897 to determine what dispositions by foreign investors will be taxed.
2. Describe interests in foreign corporations that can be used to avoid taxes on their disposition, and improve reporting of U.S. real property interests by foreign investors.
ASSIGNMENT SUBJECT
Chapter 8 REITS
At the start of the chapter, participants should identify the following topics for study:
* Benefits of REIT pools
* Advantages over limited partnerships
* Organizing a REIT
* Self-liquidating REITs
* Taxation
* Tax Reform Act of 1986
* Taxpayer Relief Act of 1997
Learning Objectives
After reading the chapter 8, participants will be able to:
1. Provide five reasons for establishing a REIT in order to realize annual income that is entirely or partly tax-sheltered and is apt to grow over time, list four advantages that REITs have over limited partnerships and their effect on investments and shareholders, and explain the recent development of the self-liquidating REIT.
2. Clarify how management operates a REIT, summarize at least four ways that REITs and the fees they pay their advisers can grow, and describe the requirements with regards to organization, operation, assets and income that are set forth in §856 through §858.
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