This valuable course brings you up-to-date information on tax issues affecting interest and debt. It covers the definition of bona fide debt, the avoidance of equity and lease treatment, imputed interest rates, and debt modification. This course also explores the various types of interest and their required allocation. For the economically troubled client, special attention is devoted to debt cancellation, repossession, discounts, and foreclosure. You'll also learn about installment sales, equity participation debt, taxable interest, and bad debts.
Upon successful completion of this course, participants will be able to:
- Identify whether interest is tax deductible under §163.
- List incentives to use corporate debt instead of equity.
- Categorize deductible interest.
- Identify provisions that deny or restrict the deduction of interest.
- Cite the special elections applicable to and treatment of carrying charges under §266.
- Identify how to allocate deductible interest based on the use and repayment of the loan proceeds.
- Identify special rules to the allocation of interest expense in connection with debt-financed acquisitions of, and distributions from, partnerships and S corporations.
- Identify categories of mortgages and characteristics of secured debt that influence the deductibility of interest.
- Define 'qualified home.'
- Identify when a stock in a cooperative housing corporation owned by a tenant-stockholder is a qualified home.
- Distinguish dividends from interest.
- List the types of U.S. savings bonds.
- Identify the tax treatment of bonds sold between interest dates.
- Categorize state or local government debt obligations.
- Identify the importance of the installment method.
- Define basic terminology associated with using the installment method.
- Identify the basic regulations governing like-kind exchanges.
- Identify how to allocate payments for a single sale of several assets among different classes according to R.R. 76-110.
- Identify circumstances when dispositions of installment obligations occur.
- Identify the variables that determine which §1038 rules for repossessions apply.
- Calculate basis and gain or loss resulting from repossession of personal property using installment method and the noninstallment method sales.
- Make a distinction between the rules, calculations, and effects of repossessions of personal and real property.
- Determine when a §166 bad debt deduction may be taken if the seller repossesses real property.
- Identify the effect that debt cancellation has on net worth and potential income inclusion from cancellation of indebtedness income.
- List exceptions to the general income inclusion rule.
- Cite the special basis reduction rules.
- Identify variables that are considered in determining whether shares of stock issued to a creditor are nominal or token.
- Identify the hidden income tax danger of directly or indirectly acquiring one's own debt at a discount.
- Identify the mechanics of equity participation debt.
- List examples of equity participation loans.
- Identify common elements and characteristics of shared appreciation loans.
- Identify the tax treatment of shared appreciation mortgages based on the hybrid concept and R.R. 83-51.
- Compare and contrast the two basic types of equity participation debt.
- Identify the general tax treatment of interest received from sources within the United States.
- Identify the tax treatment of foreign interest.
- Classify bad debts into two categories.
- Identify the tax treatment of bad debts.
- List the various forms on which a bad debt deduction should be taken, depending on the entity type.
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