Recent developments within the federal income tax system require tax professionals to be constantly attuned to developments within the area and clients are increasingly turning to tax professionals to guide them through the maze of tax law changes. This program provides a thorough description of the tax fundamentals affecting corporations and assists professionals who need to know how recent developments affect the viability of the C corporation. This comprehensive program examines the advantages and disadvantages of the corporate form of doing business, including the federal income tax rules that apply to a C corporation, the methods of capitalizing corporations, corporate tax traps such as the alternative minimum tax, the interaction between earnings and profits and dividends, corporate stock redemption transactions, and various tax return disclosure requirements related to corporate transactions.

Use of Materials

Audio or DVD
The user should begin by watching the DVD segment or listening to the audio CD for the chapter before reading the text. The user may wish to make notes of the most important concepts and any terms that are new. Next, the user should review the learning objectives at the beginning of the chapter and read the chapter. The user should work through each of the examples. It may be helpful to highlight important material and/or to make additional notes. Next, the user should complete the study questions at the end of the chapter and review the answers. If the user answers a study question incorrectly, s/he should review the section of the text that is indicated at the end of the explanation to the study question to assure comprehension of the material. The user should review the learning objectives once more to consider achievement of the objectives. After the user has finished watching the DVD or listening to the audio CDs and reading the text and working through the study questions, s/he may wish to review her/his notes and any sections of the text or DVD or audio CDs that were difficult. When the user is ready, s/he should complete the quizzer. Reviewing notes periodically will increase retention of the material.

Online
The user should begin by watching the streamed video segment, if any, or listening to the streamed audio segment, if any, for the chapter before reading the text. The user may wish to make notes of the most important concepts and any terms that are new. Next, the user should review the learning objectives at the beginning of the chapter and read the chapter. The user should work through each of the examples. After the user has studied each chapter, s/he should click on the link at the left to complete the interactive study questions. If the user answers a study question incorrectly, s/he should review the section of the text that is indicated at the end of the explanation to the study question to assure comprehension of the material. The user should review the learning objectives once more to consider achievement of the objectives. After the user has finished watching the streamed video, if any, or listening to the streamed audio, if any, and reading the text and working through the study questions, s/he may wish to review her/his notes and any sections of the text or video/audio, if any, that were difficult. When the user is ready, s/he should click on the link to the left to complete the quizzer. The user's CPE certificate will be provided immediately upon successful completion of the quizzer.

Software
The user should begin by reviewing the learning objectives at the beginning of the chapter and read the chapter. The user should work through each of the examples. As the user studies each chapter, s/he should complete the interactive study questions that appear in the lower panel of the screen. If the user answers a study question incorrectly, s/he should review the section of the text that is indicated at the end of the explanation to the study question to assure comprehension of the material. The user should review the learning objectives once more to consider achievement of the objectives. After the user has finished reading the text and working through the study questions, s/he may wish to review her/his notes and any sections of the text that were difficult. When the user is ready, s/he should click on the link at the far left to complete the quizzer. The user should email her/his quizzer statistics using the quizzer submission link in the software and the user's CPE certificate will be mailed to her/him.

Chapter 1 provides an overview of the tax issues associated with the formation of a corporation, including the corporate tax rate structure; the advantages and disadvantages of the corporate form of doing business as compared to other entities such as the S corporation, LLCs, personal service corporations, closely held corporations, etc.; and the exceptions to the general rule of the corporation as a separate entity from its shareholders. In addition, it discusses the basic principles associated with amortization of organization and start-up costs, choosing an accounting period and method of accounting, the alternative minimum tax, the accumulated earnings tax, the personal holding company tax, and transactions involving shareholders, such as the deductibility of payments to/for employees, distributions, stock redemptions, corporate reorganizations, and liquidations.

Chapter 2 addresses the basic principles of forming a corporation, including the objectives and requirements of an IRC §351 transfer to a controlled corporation, issues of concern to the transferor such as realized versus recognized gain, boot, the assumption of liabilities, the judicial doctrines useful in evaluating transfers to a controlled corporation, and the basis of stock received. In addition, it explains the issues facing the transferee as a result of an IRC §351 exchange, including basis of property received and the built-in-loss rules.

Chapter 3 explains the transactions that do not qualify for IRC §351 treatment, the characteristics and rights associated with common and preferred stock, the distinctions between par value, no par value, and stated value stock, the advantages and disadvantages of capitalizing a corporation with debt versus equity, the factors for determining whether an instrument is debt or equity, the requirements for requesting an IRS ruling on an IRC §351 exchange, and the reporting and tax return disclosure requirements for IRC §351 transactions.

Chapter 4 covers the basic rules on the standard accounting methods and the procedures for adopting or changing an accounting method, including the automatic consent for change request, the advance consent request, requirements for filing Form 3115, the IRC §481 adjustment, as well as numerous examples that qualify for the automatic consent for change in method of accounting. Various accounting periods, the procedures for changing the tax year, and the rules for organization and start-up costs are also explained.

Chapter 5 considers the additional federal income tax issues facing corporations such as the calculation of the alternative minimum tax (AMT), a corporation's alternative net operating loss deduction limitation, the corporate AMT exemption, the AMT credit, the adjustments and tax preference items to be considered when calculating the AMT, the adjusted current earnings adjustment (ACE), the exemption for small businesses, the calculation of the accumulated earnings tax, exceptions to the definition of accumulated earnings, and the personal holding company tax.

Chapter 6 addresses the importance and calculation of earnings and profits, the ordering rules used for determining the source of distributions, the taxation of distributions, and the various types of taxable dividends, including cash, constructive, deemed, and property. It also addresses the tax implications of dividends on corporate and noncorporate shareholders; the dividends-received deduction; taxable and nontaxable distributions of stock, securities, and stock rights; IRC §306 stock; distributions of a corporation's obligations; and the basic tax concepts related to extraordinary dividends.

Chapter 7 covers corporate redemption transactions, including the factors that are determinative of the nature of the income recognized by the shareholder in a corporate redemption, the attribution rules of IRC §318, the effect of redemptions on corporate earnings and profits, redemptions to pay death taxes, redemptions through related corporations, and the tax return disclosure requirements for such transactions.

Throughout this program, the user will find explanations and discussions regarding some of the issues that often face practitioners. In order to enhance the user's comprehension of the material and highlight important practical considerations, this program includes the following designation:

A Biskpoint presents analysis or commentary that attempts to explain or clarify authoritative guidance.

• Discuss various corporate tax issues associated with the formation and organization of corporations, including the advantages, disadvantages, and tax issues of the corporations and other common business entities

• Explain the basics of an IRC §351 transfer to a controlled corporation, including the basis of property transferred and shares received, the gain or loss recognized, the potential application of judicial doctrines to such transfers, and the treatment of contributions of built-in loss property

• Describe the tax consequences of a transfer to a controlled corporation that does not meet the requirement of IRC §351, including basis, disclosure requirements, and when to seek a private letter ruling for such a transaction, and the consequences of capitalizing a corporation with debt and/or equity

• Discuss the choices that a corporation has when selecting its tax year and the rules pertaining to the various tax years, identify costs related to the formation of a corporation and classify them appropriately, and explain the IRC §481 adjustments

• Describe the basic concepts and operating rules associated with the corporate alternative minimum tax (AMT) and discuss the accumulated earnings tax and the personal holding company tax

• Explain the significance of earnings and profits and the importance of making accurate calculations on an annual basis, describe the types of dividends, including cash, property, constructive, deemed, and extraordinary based on the substantive nature of various transactions, as well as the possible tax implications of each

• Describe the tax issues associated with corporate redemption transactions, including the breadth of interaction in the tax law between the corporate redemption rules and the rules providing for attribution of ownership and the disclosure requirements