2008 Income Tax Seminar Book - Part I

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FEDERAL ESTATE TAX ISSUES (FORM 706)  1-102

Role of the Non-Attorney  2
Estate Planning- What is it?  2-3
Steps in Estate Planning  3
How Does Property Transfer?  3-4
Probate  5
Intestacy  5-6
Wills  6-7
Transfers Outside of Probate  7-11
Revocable Trusts  10
Basis Adjustment – General Rule  11
Common Law – Basis Adjustment  11-12
Community Property / Marital Property – Basis Adjustment  12-13
Special Concerns for Second Marriage Situations  14-15
Estate Taxes  15-27
Federal Gift and Estate Taxes  15-17
Basis for Capital Gains  17
Annual Gift Exclusion  19
Form 709 Due Date – Gift Tax Return  20
Unlimited Marital Deduction  21
Probate vs. Gross Estate  23
Calculating the Estate Tax  24
Manipulating the $1,000,000 Gift and Incremental Estate Exemption  27-28
The Classic A-B Trust Scenario  28
General Trust Considerations in Estate Planning  28
Elements of a Trust  29
General Purposes of Trusts in Estate Planning  30
General Categories of Trusts  31-33
Trusts in the Gifting Process  33-42
Lifetime Gifting Considerations  33
Calculating Taxable Gifts  35-40
Generation Skipping Transfer Tax  41-43
Specific Trusts and Techniques  43-50
Practical Considerations  50-54
Fiduciary Income Tax Rates  51
Estate Income and Estate Transfer Tax Issues  54-69
Responsibilities of the Fiduciary  55-57
Final Income Tax Return for the Decedent – Form 1040  57-59
Checklist of Forms and Due Dates  70
Worksheet to Reconcile Amounts Reported in Name of Decedent  71
Comprehensive Example)  72-90
Life Estates  91-102
WISCONSIN SUPPLEMENTAL MATERIAL  103-112
Pointers on Wisconsin Marital Property  103-107
Pre-nuptial Agreements  104-105
Opt-in Agreements  105
The Income Rule  106-107
Opt-out Agreements  106-107
Income Tax Considerations Year of Divorce  107-108
Wisconsin and Pre-1986 Issues  108-110
Planning Considerations  108-110
Other Wisconsin Considerations  110-112
Other Methods of Reclassification  110
Potential Basis Adjustment – Upon Death of a Spouse  111-112
Wisconsin Tax Considerations  112
ARIZONA SUPPLEMENTAL MATERIAL  113-123
Pointers on Arizona Marital Property  113-121
Property acquired during marriage as community property; exceptions  113
Separate property  115-116
Management and control  116
Ownership of property acquired after moving into state  117
Right of Survivorship-Joint Tenancy vs. Community Property  117
Changing the Nature of Ownership  117
Premarital Agreements  118
Enforcement of premarital agreements; exception  119
Scope of Agreement  120
Amendment or revocation of agreement  121
Transfer of Property at Death  121-123
Probate  121
Beneficiary Deed  122-123
Arizona Tax Considerations  123
KIDDIE TAX  125-136
Overview  125
Increase in Age Limit for "Kiddie Tax"  126
Children are taxed at parents' highest rate on unearned income  126
Which parents' taxable income is used when computing a child's kiddie tax  127
How to get information from a parent's return for kiddie tax purposes  128
Kiddie tax applies to all of the child's unearned income  128
Form 8615 – Tax for Certain Children Who Have Investment Income  130
Multiple Children Subject to the Kiddie Tax  131
Multiple Children Subject to the Kiddie Tax (Example)  131-133
Reporting Children’s Income on Parents’ Return  134
Form 8814 - Parents’ Election To Report Child’s Interest and Dividend  135-136
ALTERNATIVE MINIMUM TAX  137-176
Overview  137
Alternative Minimum Tax by State, Tax Year 2005  138
Constitutionality of AMT  139
AMT Exemption Phaseouts  139
AMT Proposed Legislation  140
AMT Exemption for Certain Children  140
Cost of Repeal  141
Putting the Cost of Repeal in Context  141
Computing the Alternative Minimum Tax  142
AMT Preferences and Adjustments, Form 6251  142-160
    Standard deduction, Form 6251 - Line 1  142
    Medical Expenses, Form 6251 - Line 2  144
    Taxes, Form 6251 - Line 3  144
    Qualified housing interest, Form 6251 - Line 4  145-146
    Miscellaneous itemized deductions, Form 6251 - Line 5  146-147   
    Refund of taxes, Form 6251 - Line 7  148
    Investment interest expense, Form 6251 - Line 8  148
    Depletion, Form 6251 - Line 9  148
    Net operating loss, Form 6251 - Line 10  148    
    Tax-exempt interest from private activity, Form 6251 - Line 11  149
    Qualified small business stock, Form 6251 – Line 12  150 
    Incentive Stock Options, Form 6251 - Line 13  150-152
    Beneficiaries of estates and trusts, Form 6251 - Line 14  152 
    Large Partnerships, Form 6251 - Line 15  152
    Disposition of property, Form 6251 – Line 16  152
    Post-1986 depreciation, Form 6251 - Line 17  153-154 
    Passive Activities, Form 6251 - Line 18  154-155
    Loss Limitations, Form 6251 – Line 19  155
    Circulation expenditures, Form 6251 - Line 20  155-156
    Long-term contracts, Form 6251 - Line 21  156
    Mining costs, Form 6251 - Line 22  156
    Research and experimental, Form 6251 - Line 23  156
    Installment sales, Form 6251 - Line 24  157
    Intangible drilling costs, Form 6251 - Line 25  157
    Other adjustments, Form 6251 - Line 26  158-159
    AMT Net Operating Loss Deduction, Form 6251 - Line 27  159-160 
    Alternative minimum tax foreign tax credit, Form 6251 – Line 32  160 
AMT Credit, Form 8801  161-163
Exclusion Preferences Versus Deferral Preferences  161-162
Refundable Minimum Tax Credit  162-163
Form 6251 and Form 8801 Illustrations  164-175
Online Tools Available from IRS  176
TAXING TOPICS  177-225
Overview  177
Debt Forgiveness  178-192
How to report  178-179
New Law: Discharges of up to $2 million of mortgage debt  180-181
Debt discharge for bankrupt or insolvent taxpayers  181-183
Reduction of Tax Attributes – Form 982  183-189
Foreclosure by Lender – Nonrecourse Debt  190
Foreclosure by Lender – Recourse Debt  191
Tax Research  193-208
Statutory Sources  193
Administrative Sources  193-196
Judicial Sources  196198
Summary of Advantages and Disadvantages of Various Courts  198
Finding Court Cases  199
Cost Effective Resources  200-203 
Frequently Used Telephone Numbers for Practitioners  204
Back to Basics Income Tax Seminars® (Tax Resources Tab)  204
IRS Sales Tax Calculator  205
Other Tax Research Sources  206-208
Safeguarding Taxpayer Data  209-215
Treasury and IRS Give Taxpayers Greater Control  209-210
FAQs Related to Strengthened Taxpayer Control over Tax Information  210-212
Post-2008 rules on disclosure or use of tax return information  213-217
Federal Developments  216-220
Announcement 2008-52  216-217
Standard Mileage Rates for 2008  217
IRS has issued Extended Due Date Changes for Some Business Returns  218
IRS Releases Updated Drafts of Corporate and Partnership Tax Forms  218
IRS Under Fire with Respect to Unpaid Payroll Taxes  219-220
Court Cases  221-222
    Couple Not Entitled to Deductions for Unsubstantiated Expenses  221
    Rental real estate activity - business vs. personal expenses  221
    Business deductions – substantiation  222
    Gross income - gifts vs. compensation  222
    Income from S Corporation Subject to Employment Taxes  222
Original Issue Discount  223-225
Reporting OID  223-224
De Minimis OID  225
Securities Exempt from OID Rules  225