2 Credits: Taxes
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.
Upon successful completion of this course, participants will be able to:
- Determine “interest” and select how much is tax deductible under §163 by:
- Identifying what constitutes bona fide debt considering economic substance and purpose and the differences that such debt has from installment sales, long-term & leveraged leases, and annuities;
- Specifying how transactions with family members and controlled corporations can recharacterize alleged indebtedness into gift or business equity naming the factors used in this recharacterization and;
- Recognizing incentives to use corporate debt instead of equity and the special treatment of failed equity investment under §1244.
- Identify deductible interest and special calculation concepts and procedures by:
- Recognizing the allocation of interest based on the debt’s business or personal purpose specifying the application of any carryover rules;
- Determining net investment income including its impact on the deductibility of investment interest;
- Recognizing the special tax treatment given to student loans, margin accounts, and market discount bonds stating what happens to any disallowed interest expense; and
- Specifying the timing considerations in interest reporting including interest paid in advance.
- Recognize nondeductible interest types and provisions that through restriction create nondeductible interest by:
- Identifying when interest is nondeductible personal interest under §163(h)(1);
- Determining the disallowance of interest related to tax-exempt income under §265, the life insurance interest restrictions of §264; the §465 at-risk limitations and application of the §469 passive loss rules; and
- Specifying the treatment of certain commitment fees and service charges based on R.R. 67-297 and caselaw.
- Identify interest under the cash or accrual method recognizing the special elections applicable to and treatment of carrying charges under §266, below-market loans, and imputed interest.
March 2, 2023
General understanding of federal income taxation.
IRS Provider Number: 0MYXB
IRS Course Number: 0MYXB-T-02218-22-S
IRS Federal Tax Law Credits: 2
CTEC Course Number: 2071-CE-1559
CTEC Federal Tax Law Credits: 2
CFP Notice: Not all courses that qualify for CFP® credit are registered by Western CPE. If a course does not have a CFP registration number in the compliance section, the continuing education will need to be individually reported with the CFP Board. For more information on the reporting process, required documentation, processing fee, etc., contact the CFP Board. CFP Professionals must take each course in it’s entirety, the CFP Board DOES NOT accept partial credits for courses.
CTEC Notice: California Tax Education Council DOES NOT allow partial credit, course must be taken in entirety. Western CPE has been approved by the California Tax Education Council to offer continuing education courses that count as credit towards the annual “continuing education” requirement imposed by the State of California for CTEC Registered Tax Preparers. A listing of additional requirements to register as a tax preparer may be obtained by contacting CTEC at P.O. Box 2890, Sacramento, CA, 95812-2890, by phone toll-free at (877) 850-2832, or on the Internet at www.ctec.org.
Meet The Experts
Danny Santucci, BA, JD, is a prolific author of tax and financial books and articles. His legal career started with the business and litigation firm of Edwards, Edwards, and Ashton. Later he joined the Century City entertainment firm of Bushkin, Gaims, Gaines, and Jonas working for many well-known celebrities. In 1980, Danny established the law firm of Santucci, Potter, and Leanders in Irvine, California. With increasing lecture and writing commitments, Danny went into sole practice in 1995. His practice emphasizes business taxation, real estate law, and estate planning. Speaking to more than 100 groups nationally each year, he is known …