2001 Small Business Tax Workshop Material

Table of Contents / Page No.

A. ENTITY SELECTION  A-1 to A-89
Introduction  A-2 to A-3
How is Income Taxed?
(Employer/Employee Relationships)  A-2 to A-3
Types of Entities:
1) Sole Proprietorship  A-4 to A-7
Non-Tax Considerations  A-4
Tax Considerations  A-4 to A-7
Hiring the Children  A-5
Hiring the Spouse  A-6
Advantages & Disadvantages  A-7
2) Partnerships  A-7 to A-8
Non-Tax Considerations  A-7 to A-8
Tax Considerations  A-8
Advantages & Disadvantages  A-8
3) Corporation  A-8 to A-67
Non-Tax Considerations  A-8 to A-10
General Law  A-9
Corporate Formalities  A-9 to A-10
Tax Considerations:
S Corporation  A-10 to A-16
Previous "C" Corporate Earnings  A-11 to A-12
Social Security Income & Cases  A-12 to A-16
Advantages & Disadvantages  A-16 to A-17
C Corporation  A-17 to A-42
Qualified Personal Service Corporation  A-17 to A-18
Double Taxation  A-18
Salaries and Rent  A-19
Dividends Related to E&P  A-19
Reducing Dividend Dilemma  A-19 to A-20
Salaries (& cases)  A-20 to A-26
Loans to Shareholders (& cases)  A-26 to A-27
Leasing of Property to Corporation  A-27 to A-29
Payment of Shareholder Personal Expenses (& cases)  A-29 to A-30
Divorce & Constructive Dividend  A-30
Distributions to Shareholders  A-30 to A-31
2000 Tax Rates  A-31
Tax Rate Examples  A-32 to A-33
Social Security vs. Self-Employment Taxes  A-33 to A-34
Deductible Fringe Benefits and Other Costs  A-34
Taxes on Investment Income
(Accumulated Earnings Tax)  A-34 to A-36
Switch from C to S  A-37 to A-38
Sole Proprietorship to C Corporation  A-38 to A-39
Personal Service Corporation  A-39
Sale of Business/AMT  A-39 to A-40
Qualified Retirement Plans  A-40 to A-41
Lower Basis for Sale of Business  A-41
Lower Sales Price  A-41
Unfavorable Gain/Loss Treatment at Liquidation  A-42
Cost of Preparing Tax Returns  A-42
Advantages/Disadvantages  A-42
Sole Proprietorship to C Corporation  A-42 to A-48
Cash Flow Exceeds
Taxable Income  A-42 to 43
§351 IRC Transferring Property  A-43 to A-46
Making the Switch - Transfer of Assets  A-47 to A-48
Partnership to C Corporation  A-48 to A-53
Inside Basis vs. Outside Basis  A-48 to A-49
Partners Transfer Interests  A-50
Liquidate Partnership  A-51 to A-52
Warning: Partnership to S Corporation  A-52
C Corporation to S Corporation  A-52 to 64
Built-In Gains Tax w/Example  A-52 to A-64
Personal Holding Company Status  A-64 to A-67
4) Limited Liability Company  A-67 to A-74
Non-Tax Considerations  A-67 to A-69
Tax Considerations  A-69 to A-72
Switching from Corporation to LLC  A-72 to A-73
Switching from Partnership to LLC  A-73 to A-74
5) Family Limited Partnership  A-75 to A-80
What is a Family Limited Partnership?  A-75
Why Should My Clients Care?  A-76
Discounted Values & Planning Ahead  A-76 to A-80
When Should a Client Consider an FLP?  A-80
Employee Benefits By the Entity  A-81 to A-87
Medical Reimbursement Plans  A-81 to A-83
Health Insurance  A-84 to A-85
Disability Insurance  A-86
Long-Term Care  A-87
Estate Considerations By the Entity  A-88 to A-89
B. BUY-SELL AGREEMENTS  B-1 to B-39
Business Valuations  B-2 to B-25
Importance of Business Valuations  B-2 to B-4
Setting the Ground Rules  B-4
Relevant Data  B-4 to B-5
Sale/Purchase of Business  B-5 to B-6
Example  B-6 to B-7
Other Thoughts to Keep in Mind  B-7 to B-8
Valuation Methods  B-8 to B-25
Rules of Thumb  B-8 to B-12
Book Value Method  B-11 to B-12
Asset Earnings Formula  B-13
Discretionary Earnings Method  B-13 to B-14
Formula Value - "Straight Capitalization"  B-14 to B-16
ARM (Formula) Method  B-16 to B-20
Example Illustration  B-20 to B-22
Concluding Points on Business Valuations  B-22 to B-25
Buy-Sell Agreements  B-26 to B-39
Introduction  B-26 to B-27
Buy-Sell Funding Options  B-27 to B-28
Types of Buy-Sell Agreements  B-28 to B-35
Cross Purchase Agreements  B-28 to B-29
Entity Redemption Plan  B-29 to B-35
Other Aspects of Buy-Sell Agreements  B-35 to B-39
Disability Considerations  B-35
Beneficiary Designations  B-35 to B-36
Using a Trustee  B-36
S Corporation Concerns  B-36 to B-37
Insurance Decisions  B-37 to B-39
C. ACCOUNTING METHODS  C-1 to C-25
Accounting Periods  C-2
Accounting Methods  C-2 to C-25
What are the Methods?  C-2 to C-3
Cash Method  C-3
Accrual Method  C-4
Hybrid Method  C-4
Other Methods  C-4 to C-5
Which Methods can the Client Use?  C-5 to C-10
Change in Method of Accounting  C-10 to C-25
Example  C-13 to C-25
D. NONQUALIFIED DEFERRED COMPENSATION  D-1 to D-28
General Thoughts About Compensation Planning  D-2 to D-3
So What is Non-Qualified Deferred Compensation?  D-3 to D-4
Non-Qualified Deferred Compensation Plans  D-4 to D-12
When Should Your Business Client Consider an NQDC Plan?  D-5 to D-6
Review of Tax Issues  D-6 to D-7
Regulations  D-7 to D-9
Other Tax Issues  D-9 to D-11
Benefits Available  D-11 to D-12
Funded and Unfunded Plans  D-12 to D-21
Accounting Example  D-12 to D-13
Constructive Receipt Doctrine  D-13 to D-14
Funded Plans  D-14 to D-15
Economic Benefit Doctrine  D-15
Informally Funded Plans  D-15
Reserve Account  D-15
Rabbi Trust  D-16
"Funding" an Unfunded Plan  D-16 to D-21
Life Insurance  D-16 to D-19
Bonds  D-20
Variable Annuity  D-20
Mutual Fund  D-20
Example  D-21
Types of Non-Qualified Plans  D-21 to D-22
Sample Presentations  D-24 to D-26
Qualified Plan vs. Salary Continuation Plan  D-27
Case Review  D-28