Table of Contents
CHAPTER 1 Financial Tax Planning1-1
| Comparing Goals & Purposes | 1-2 |
| Investment Purposes | 1-3 |
| Investment Goals | 1-11 |
| Find Your Place in Time | 1-12 |
| "Know Thy Investment Self" | 1-14 |
| Investment Vehicles & Entities | 1-14 |
| Retirement Now - The Ultimate Objective | 1-23 |
| Defining Retirement | 1-24 |
| When Do I Want To Retire? | 1-24 |
| What Kind Of Lifestyle Do I Want? | 1-25 |
| Do I Want To Move? | 1-26 |
| Determining Retirement Costs & Income Needs | 1-30 |
| Developing a Plan | 1-35 |
| Savings - The 10% Rule | 1-36 |
| Basic Planning Elements | 1-38 |
CHAPTER 2 BUILDING AN ESTATE2-1
| Assets, Income & Cash | 2-2 |
| Income | 2-2 |
| Budgeting | 2-15 |
| Cash | 2-18 |
| Acquisition | 2-26 |
| Assets | 2-27 |
| Management | 2-28 |
| Taxes & Investment Economics | 2-32 |
| Deductions Now, Taxes Later, or Maybe Never | 2-32 |
| Leverage | 2-34 |
CHAPTER 3 PRESERVATION OF WEALTH3-1
| Four Obstacles to Preservation | 3-1 |
| Spending Habits | 3-1 |
| Ignorance | 3-9 |
| Inflation | 3-10 |
| Taxes | 3-11 |
CHAPTER 4 DEFERRAL4-1
| Section 1031 "Like-Kind" Exchanges | 4-2 |
| Exchange Advantage | 4-2 |
| Importance of Deferral | 4-2 |
| Three Elements | 4-3 |
| Related Party Exchanges | 4-13 |
| Foreign Real Property Exchanges | 4-15 |
| Qualified §1031 Exchange of Personal Property Repealed | 4-15 |
| Delayed (Deferred) Exchange Regulations | 4-23 |
| Retirement Plans | 4-36 |
| Designing Your Retirement | 4-36 |
| Sources of Retirement Income | 4-37 |
| Installment Sales | 4-48 |
| Requirements | 4-48 |
| Formula | 4-49 |
| Mortgage in Excess of Basis | 4-49 |
| Recapture | 4-51 |
| Dealers | 4-51 |
| At-Risk Rule | 4-51 |
| Deferred Compensation | 4-52 |
| Options | 4-52 |
CHAPTER 5 REDUCTION5-1
| Tax Credits | 5-1 |
| Work Opportunity Tax Credit (WOTC) Expired– §51 | 5-1 |
| Research Tax Credit - §41 | 5-3 |
| Rehabilitation Tax Credit - §47 | 5-4 |
| Low Income Housing Credit - §42 | 5-5 |
| Child & Dependent Care Credit - §21 | 5-7 |
| Estimated Taxes | 5-8 |
| General Rule | 5-8 |
| Cash-Saving Strategies | 5-9 |
| Underpayment Cautions | 5-9 |
| Tax Refund Trap | 5-10 |
| Basic Deductions | 5-11 |
| Interest | 5-11 |
| Automobile Deductions | 5-14 |
| Commuting - Local Business Transportation | 5-20 |
| Regular/Irregular Rule - R.R. 90-23 | 5-20 |
| Temporary Work Outside Metropolitan Area - R. R. 99-7 | 5-22 |
| Business Entertainment | 5-23 |
| Prior to 2018 | 5-23 |
| Statutory Exceptions - §274(e) | 5-24 |
| Depreciation & Cost Recovery - §167 & §168 | 5-25 |
| Personal Property | 5-26 |
| Net Operating Losses - §172 | 5-32 |
| Creation of an NOL | 5-32 |
| Individual NOLs | 5-32 |
| Corporate NOLs | 5-33 |
| Further Limitations | 5-34 |
| Tax Breaks for Nonitemizers | 5-34 |
| Adjustments | 5-34 |
| Credits | 5-34 |
| Amended Returns | 5-34 |
| Audit Avoidance | 5-35 |
| Safest Amendments | 5-35 |
| Not-So-Safe Amendments | 5-35 |
CHAPTER 6 INCOME SPLITTING6-1
| Using Progressive Tax Rates | 6-2 |
| Splitting Income Among Group Members | 6-2 |
| Wealth Allocation | 6-2 |
| Major Formats | 6-2 |
| Unincorporated Business | 6-4 |
| Deductible Business Expenses | 6-4 |
| Home-Office Deduction | 6-4 |
| Retirement Plans | 6-6 |
| Hiring Your Children | 6-7 |
| Hiring Your Spouse | 6-7 |
| Travel Expenses | 6-7 |
| Casualty Losses | 6-7 |
| Bad Debts | 6-7 |
| Self-Employment Tax | 6-7 |
| “C” or Regular Corporation | 6-10 |
| Planning Considerations | 6-12 |
| When to Incorporate | 6-12 |
| Formation | 6-13 |
| Repeal of the “General Utilities” Doctrine | 6-14 |
| “S” Corporation | 6-15 |
| Single Taxation | 6-15 |
| Planning Considerations | 6-16 |
| Tax Advantages | 6-16 |
| Formation | 6-17 |
| Corporations That Qualify | 6-17 |
| Income-Splitting | 6-18 |
| Estimated Tax Payments | 6-19 |
| Partnership | 6-19 |
| Partner's Distributive Share | 6-19 |
| Partnership Return | 6-19 |
| Schedule K-1 (Form 1065) | 6-20 |
| Family Partnerships | 6-20 |
| Gift of Capital Interest | 6-21 |
| Custodianship & Children | 6-24 |
| Taxation | 6-24 |
| Child Care & Education | 6-25 |
| Gifts | 6-29 |
| Gifts by Check | 6-30 |
| Interest Free Loans | 6-31 |
| De Minimis Exception | 6-31 |
| Special Rule for Gift Loans | 6-31 |
CHAPTER 7 ELIMINATION7-1
| $500,000 Home Sale Exclusion - §121 | 7-1 |
| Two-Year Ownership & Use Requirements | 7-2 |
| Tacking of Prior Holding Period | 7-2 |
| Vacant Land | 7-2 |
| Mixed Business & Residence Use | 7-3 |
| Prorata Exception | 7-3 |
| Use of Old §1034 & §121 - Gone Long Ago | 7-5 |
| Limitations on Exclusion | 7-6 |
| Renting to Parents | 7-6 |
| Municipal Bonds | 7-7 |
| Tax-Exempt Interest on Qualified State or Local Obligations | 7-7 |
| Private Activity Bonds | 7-8 |
| Divorce & Separation Settlements | 7-8 |
| Pre-2019 Alimony | 7-8 |
| Child Support | 7-9 |
| Property Division | 7-9 |
| Dependency Exemption Eliminated | 7-9 |
| Gifts & Inheritances | 7-9 |
| Basis of Gift | 7-10 |
| Holding Period | 7-10 |
| Income from Property Given to a Child | 7-10 |
| Life Insurance | 7-11 |
| Proceeds Not Received in Installments | 7-11 |
| Proceeds Received in Installments | 7-11 |
| Fringe Benefits | 7-12 |
| Prizes & Awards - §74(b) | 7-12 |
| Group Life Insurance Premiums - §79 | 7-13 |
| Accident and Health Plans - §106 & §105 | 7-14 |
| Meals & Lodging - §119 | 7-14 |
| Cafeteria Plans - §125 | 7-14 |
| Educational Assistance Program - §127 | 7-15 |
| Dependent Care Assistance - §129 | 7-15 |
| Section 132 | 7-16 |
| Taxation & Valuation of Benefits | 7-19 |
| Valuation Provisions | 7-19 |
| Eating Facilities | 7-20 |
| Meal Subsidy Rule | 7-20 |
| ERISA Compliance | 7-21 |
| Employee Expense Reimbursement | 7-22 |
| Unreimbursed Employee Expenses | 7-22 |
| Reimbursed Employee Expenses | 7-22 |
| Fixed & Variable Rate (FAVR) Allowances - R.P. 90-34 | 7-32 |
| Social Security | 7-35 |
| Taxation | 7-35 |
| Earnings Record | 7-35 |
| Payments Exempt from Social Security | 7-35 |
| Social Security Checkup | 7-36 |
CHAPTER 8 Estate Planning8-1
| Unlimited Marital Deduction | 8-2 |
| Outright To Spouse | 8-2 |
| Marital Deduction Trust - §2056 | 8-3 |
| Qualified Terminable Interest Property (QTIP) Trust | 8-3 |
| Applicable Exclusion Amount | 8-3 |
| Stepped-up Basis - §1014 | 8-5 |
| Basic Estate Planning Goals | 8-5 |
| Primary Dispositive Plans | 8-6 |
| Simple Will | 8-6 |
| Trusts | 8-12 |
| Types of Trusts | 8-13 |
| Living "A-B" Revocable Trust | 8-13 |
| Living "A-B-C" (QTIP) Trust | 8-16 |
| Charitable Trusts | 8-18 |
| Charitable Remainder Trusts | 8-18 |
| Charitable Income Trusts | 8-19 |
| Insurance Trusts | 8-19 |
| Family Documents | 8-21 |
| Living Will | 8-23 |
| Property Agreement & Inventory | 8-23 |
| Durable Power Of Attorney | 8-23 |
| Conservatorship | 8-24 |
| Funeral Arrangements | 8-24 |
| Anatomical Gifts | 8-24 |
| Private Annuity? | 8-24 |
| Advantages to the Transferor | 8-25 |
| Disadvantages to the Transferor | 8-25 |
| Advantages to the Transferee | 8-25 |
| Disadvantages to the Transferee | 8-25 |
| Regulations Restrict Private Annuity Income | 8-25 |
Answers & Explanations8-28
Glossary8-58
Index of Keywords & Phrases8-59
Course Details
Author: Danny Santucci, J.D.
Danny earned his Bachelor of Arts in Political Science from the University of California at Irvine in 1969. He received his Juris Doctorate from Boalt Hall School of Law, University of California at Berkeley in 1972, at which time he began practice as a tax attorney in Southern California.
His legal career was initiated with the business and litigation firm of Edwards, Edwards and Ashton. Later he joined the Century City entertainment firm of Bushkin, Gaims, Gaines & 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.
Danny has been an officer and active member in various organizations including the Glendale Bar Association, Century City Bar Association, Orange County and Los Angeles County Bar Associations, California State Bar Association, Toastmasters and Lions Club. He also avidly supports the American Association for the Advancement of Science. He has been admitted to practice before all California and federal courts including the United States Tax Court and the United States Supreme Court.
Serving as a lecturer for the Continuing Education of the Bar of California, Golden Gate University, and numerous state C.P.A. societies, Danny teaches a variety of tax, business and real estate courses. Danny has been in demand all across the country as a speaker for all levels of professional and civic organizations and numerous major seminar circuits. Danny spoke to over 2,000 people per month and traveled more than 150,000 miles annually.
In 2015, he withdrew from the lecture circuit to devote himself to tax research and writing. The author of numerous texts, he is listed in "Who’s Who in Creative Real Estate" and is admitted to the American Exchangor’s Hall of Fame.
Publication/Revision Date: 9/25/2026
Course Exam Questions (online): 90 (multiple-choice)
Program Delivery Method: Self-Study (NASBA QAS Self-Study)
Available Formats of Course Text: PDF or PDF plus printed copy sent in the mail
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Overview | None | None |
| CFP® | Intermediate | None | None |
| EA/OTRP | Overview | None | None |
* This program is appropriate for professionals at all organizational levels.
Sponsor ID Numbers
National Registry of CPE Sponsors ID: 107615
CFP Board Sponsor ID: 1008 — Course ID: 257131
IRS Qualified Sponsor ID: FWWKO — Course ID: FWKKO-T-00800-26-S
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
Chapter 1: Financial Tax Planning
Major Topics
- Goals v. purposes
- Investment purposes
- Myths of retirement
- Investment goals
- Investment needs of five critical decades
- Investment vehicles & entities
- Retirement - the ultimate objective
- Retirement costs & income needs
- Retirement plan development
- Basic planning elements
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Differentiate short-term financial goals and investment purposes.
- Specify ways to hold title to assets, starting with the simplest and most direct way to hold property and cite the tax benefits and drawbacks of co-tenancies, corporations (both C & S), partnerships, qualified retirement plans, and trusts.
- Recognize the importance of early retirement planning using a balance sheet method and identify cost and income needs, specifying the purpose of savings.
After studying the materials in Chapter 1, answer exam questions 1 to 10.
Chapter 2: Building an Estate
Major Topics
- Types of income
- Information reporting on taxable income
- Rules of budgeting
- Cash
- Acquisition
- Assets
- Rules of management
- Managing risk
- Taxes
- Leverage
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify money management, specifying income types, recognize causes of increased taxable income for itemizing taxpayers, and specify taxable income types and their proper reporting.
- Determine the distinctions between tax-free and tax deferred income, and identify tax-deferred investments.
- Specify ways to shelter income, stating how income sheltering amplifies investment return.
- Recognize the budgeting of income into cash by containing expenditures and developing discretionary income and determine how to convert income into assets by purchasing investments.
- Specify tax-advantaged investments citing management rules and determine the economic impact of accelerating deductions.
After studying the materials in Chapter 2, answer exam questions 11 to 23.
Chapter 3: Preservation of Wealth
Major Topics
- Obstacles to preservation
- Tracking spending
- Building savings
- Designing a budget
- Determining worth
- Analyzing net worth
- Ignorance
- Inflation
- Taxes
- Tax planning tactics
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
Chapter 4: Deferral
Major Topics
- Elements of like-kind exchanges
- Related party exchanges
- Personal & multiple property regulations
- Delayed (deferred) exchange regulations
- Actual & constructive receipt rule
- Qualified contribution plans
- Tax-deferred annuities
- Installment sales
- At-risk rule
- Deferred compensation and options
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify the benefits of tax deferral and recall the tax deferral advantage under §1031, listing its elements.
- Specify the related party §1031 restrictions, identifying prohibited parties or entities, disallowance of personal property and partnership exchanges, and recognize the use of an intermediary in exchanges.
- Identify retirement plan design, and list popular methods for providing for retirement.
- Specify the requirements for an installment sale, identify the application of the at-risk rules, and determine how to use a property option to receive income and postpone tax.
After studying the materials in Chapter 4, answer exam questions 29 to 43.
Chapter 5: Reduction
Major Topics
- Work Opportunity Credit & Rehabilitation Credit
- Low Income Housing Credit & Child & Dependent Care Credit
- Estimated taxes
- Interest
- Automobile deductions
- Business entertainment deductions
- Depreciation & cost recovery
- Net operating losses
- Tax breaks for nonitemizers
- Amended returns
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify tax credits specifying qualified computational expenses, limitations, and restrictions.
- Recognize the types of deductible and nondeductible interest, including personal, investment, and prepaid interest.
- Identify business vehicle operating costs using (or switching between) the actual cost method or the standard mileage rate.
- Recall the statutory exceptions to the disallowance of entertainment deductions and recognize the application of R.R. 90-23 and R.R. 99-7 to the deduction of transportation costs to a temporary work location.
- Determine the requirements of business asset expensing under §179 and identify sources of §172 net operating losses (NOLs), recognizing carryback and carryover rules.
After studying the materials in Chapter 5, answer exam questions 44 to 59.
Chapter 6: Income Splitting
Major Topics
- Using progressive tax rates
- Deductible business expenses
- Home-office deduction
- C or regular corporations
- S corporations
- Family partnerships
- Kiddie tax trap
Chapter 6
Major Topics
- Childcare & education
- Gifts
- Interest-free loans
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize formats for income splitting, determine the restricted tax treatment of employee business expenses, and cite changes made to home office deduction under TRA '97.
- Identify the tax treatment of personal and business casualty losses and bad debts.
- Determine the uses and tax characteristics of regular and S corporations by recognizing the taxation of these entities, including their ability to split income.
- Recognize the use of partnerships to split income among partners and reduce estate taxes.
- Identify the use of custodianship to split income, specifying "kiddie" tax considerations and recognize good investments for children, including bonds.
After studying the materials in Chapter 6, answer exam questions 60 to 72.
Chapter 7: Elimination
Major Topics
- $500,000 home sale exclusion
- Municipal bonds
- Divorce & separation settlements
- Gifts & inheritances
- Life insurance
- Fringe benefits
- Taxation & valuation of benefits
- Employee expense reimbursement & reporting
- Social Security
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize the requirements of the current §121 home sale exclusion, citing its differences with prior tax law and specify the tax elimination aspects of interfamily transactions such as divorce and gifts.
- Recognize employer deductions as a means to increase tax-free incentive-based compensation for employees using fringe benefits under §132 and employer-paid accident & health coverage.
- Identify how to comply with ERISA plan requirements, and specify the proper reporting of reimbursed and unreimbursed business expenses under accountable and nonaccountable plans.
After studying the materials in Chapter 7, answer exam questions 73 to 80.
Chapter 8: Estate Planning
Major Topics
- Unlimited marital deduction
- Applicable exclusion amount
- Stepped-up basis
- Basic estate planning goals
- Simple will
- Types of trusts
- Charitable trusts
- Insurance trusts
- Family documents
- Private annuities
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize the unlimited marital deduction, including its effect on the gross estate of the value of property, specify the applicable exclusion amounts for various years of death, determine a "stepped-up basis" for inherited assets, and identify the function of probate.
- Specify several basic estate plans including family documents, wills, and trusts, and identify the advantages and disadvantages of private annuities.
After studying the materials in Chapter 8, answer exam questions 81 to 90.
