Shop Courses > Guide to Federal Individual and Corporate Taxation

Guide to Federal Individual and Corporate Taxation #491926

Course Overview

Credit

Amount

CPA

CFP^®

24.5

EA / OTRP

Course Author: Danny Santucci, J.D. Field of Study (CPA): Taxes Field of Study (CFP): Tax Planning Field of Study (EA/OTRP): Federal Tax Law

Course Description

Course publication/revision date: This course was updated on 3/24/2026 (covers 2026 tax year).

Designed to make the practitioner comfortable with “high traffic” issues, this program enables participants to discuss and handle business/personal tax essentials. The course examines and explains the practical aspects of individual & corporate planning, bridging the gap between theory and application. Significant new developments are summarized with an emphasis on tax savings ideas. This course examines and explains the practical aspects of using a closely held corporation to maximize after-tax return on business operations. Recent developments giving corporations a competitive edge over other entities are explored and detailed. Practitioners are alerted to often missed fringe benefits, retirement planning opportunities, corporate business deductions, income splitting possibilities, and little-known estate planning techniques.

Table of Contents

CHAPTER 1 Individual Tax Elements1

Federal Income Taxes: A Description	1
Application of U.S. Individual Income Tax	1
Rates, Tables, & Statutory Amounts	4
Income Tax Rates - §1	4
Standard Deduction - §63	6
Personal & Dependency Exemptions (Repealed) - §151	7
Limitation on Itemized Deductions (Repealed) - §68	8
Earned Income Tax Credit - §32	9
Social Security & Self-Employment Earnings Base	10
Standard Mileage Rate	10
Qualified Transportation Fringes	10
Passenger Automobile Depreciation Limits ("CAPS")	11
Expensing Deduction - §179	11
Self-Employed Health Insurance Deduction	11
Corporate Income Tax Rates	11
Review Questions	12
Withholding & Estimated Tax	13
Estimated Tax - §6654	13
Social Security, Medicare & FUTA (or Payroll) Taxes	14
Filing Status	17
Marital Status	17
Review Questions	24
Gross Income	28
Compensation	29
Fringe Benefits	29
Rental Income	29
Social Security Benefits	30
Review Questions	33
Alimony & Spousal Support	34
Prizes & Awards - §74 & §274	36
Dividends & Distributions	36
Discharge of Debt Income	40
Bartering	44
Recoveries	46
Review Questions	49
Children's Income - §63, §73 & §6012	51
Exclusions from Income	57
Educational Savings Bonds - §135	57
Scholarships & Fellowships - §117	59
Education Assistance Programs - §127	60
Employer Educational Trusts - §83	60
Qualified Tuition Programs (QTP) - §529	61
Gift & Inheritance Exclusion - §2503	61
Insurance - §101(a)	63
Review Questions	65
Personal Injury Awards - §104	66
Tax Benefit Rule - §111	67
Interest on State & Local Obligations - §103	67
Foreign Earned Income Exclusion - §911	68
Nonbusiness & Personal Deductions	68
Tip Income Deduction - §61	69
Overtime Pay Deduction- §61	70
Itemized Deductions	70
Personal & Dependency Exemptions (Repealed) - §151	71
Interest Expense - §163	72
Review Questions	78
Education Expenses	86
Medical Expense Deductions - §213 [Schedule A]	87
Charitable Contributions - §170 [Schedule A]	95
State and Local Tax (SALT) Deduction - §164 [Schedule A]	108
Review Questions	113
Casualty & Theft Losses Suspended - §165 [Schedule A]	115
Itemized Deductions Subject to 2% Floor (Repealed) - §62	117
Moving Cost Deduction & Reimbursement (Repealed) - §217	117
Credits	118
Child & Dependent Care Expenses Tax Credit - §21 [Form 2441]	118
Earned Income Tax Credit - §32 [Form 1040]	120
Review Questions	120
Adoption Credit - §23 & §137	121
Child Tax Credit - §24	122
American Opportunity Tax (formerly Hope) & Lifetime Learning Credits - §25A	124
American Opportunity Tax Credit - §25A(b)(1)	125
Lifetime Learning Credit - §25A(a)(1)	125
Ministers & Military - §107	126
Clergy	126
Military & Veterans	127
Review Questions	129

CHAPTER 2 Property Transfers & Retirement Plans132

Sales & Exchanges of Property	132
Conditional Sales Contract or Lease	132
Easements	133
Capital Gains & Losses	133
Review Questions	141
Sale of Personal Residence - §121	142
Installment Sales - §453	144
Review Questions	151
Repossessions - §1038	152
Review Questions	163
Involuntary Conversions - §1033	164
Review Questions	173
At Risk Limits for Real Estate - §465 - §465 [Form 6198]	174
Like-Kind Exchanges - §1031 [Form 8824]	177
Review Questions	185
Retirement Plans	186
Qualified Deferred Compensation	186
Basic Requirements for a Qualified Retirement Plan	191
Review Questions	193
Types of Qualified Retirement Plans	198
Review Questions	203
Required Minimum Distributions (RMDs)	211
Tax-Free Rollovers	223
Contribution Limits	227
§401(k), §403(b) & §457 Elective Deferral & Catch-up Limits	229
Review Questions	232

CHAPTER 3 Losses, AMT & Compliance235

Passive Losses	235
Prior Law	235
Passive Loss Rules - §469	237
Calculating Passive Loss	238
Categories of Income & Loss	238
Suspension of Disallowed Losses - §§469(g) & (b)	243
Taxpayers Affected - §469(a)(2)	249
Review Questions	251
Activities – Reg. §1.469-4	252
Alternative Minimum Tax - §55	256
Computation	256
Minimum Tax Credit - §53	270
AMT for Large Corporations - §55	271
Review Questions	273
Compliance	275
Reporting Requirements	275
Review Questions	287
Accuracy-Related Penalties - §6662	289
Negligence or Disregard - §6662(b)(1)	289
Substantial Understatement of Income Tax - §6662(d)	290
Substantial Valuation Misstatement - §6662(e)	291
Substantial Overstatement of Pension Liabilities - §6662(f)	292
Substantial Estate & Gift Tax Valuation Understatement - §6662(g)	292
Understatement Due to Unreasonable Position - §6694(a)	292
Information Reporting & Penalties - §6721 et al	295
Corrections Resulting in Reduced Penalties	295
Reasonable Cause	296
Failures	296
Failure to Furnish Copy of Return to Taxpayer - §6695(a)	296
Failure to Sign Return - §6695(b)	296
Failure to Furnish Identifying Number - §6695(c)	296
Failure to Retain Copy or List - §6695(d)	296
Failure to File Partnership Return - §6698	296
Failure to File S Corporation Return - §6699	296
Disclosure or Use of Information - §6713	297
Statute of Limitations for Assessments	297
Three-Year Assessment Periods	297
Six-Year Assessment Period	297
No Statute Of Limitations	297
Extension of Statute Of Limitations	297
Examination of Returns	297
How Returns Are Selected	298
Arranging the Examination	298
Repeat Examinations	299
Changes to Return	299
Appealing Examination Findings	299
Other Remedies	300
Review Questions	301

CHAPTER 4 Business Forms & Characteristics303

Sole Proprietorships	304
Advantages	305
Disadvantages	305
Self-Employment Taxes	305
Estimated Tax Payments	306
20% Deduction	306
Partnerships	307
Conduit Entity	307
Advantages	307
Disadvantages	308
Husband-Wife Partnerships	308
General Tax Aspects	308
Limited Partnerships	309
At-Risk Rules - §465	309
Review Questions	310
Passive Loss Limitations - §469	312
Limited Liability Companies	315
Estates & Trusts	315
Income Distribution	315
Business Trusts	315
Unincorporated Associations	316
Corporate Treatment	316
Corporation Defined	317
Effect of State Laws	317
Corporate Characteristics	317
Check-The-Box Regulations	318
Subchapter S Corporations	319
Ordinary "C" Corporations	320
Advantages	320
Disadvantages	321
Personal Service Corporations - §441, §448, §469	321
Testing Period	321
Personal Services	322
Principal Activity & Substantial Performance	322
Employee-Owner	322
Passive Loss Limitations - §469(a)(2)	323
Qualified Personal Service Corporation - §448	323
Federal Corporate Income Taxation Overview	324
Taxable Income	324
Corporate Tax Rates	325
Tax Tables	325
Alternative Minimum Tax	328
Reinstatement of AMT for Larger Corporations - §55(b)(2)	328
Review Questions	329

CHAPTER 5 Corporate Formation & Capitalization331

Incorporation - §351	331
Basic Requirements	331
Property	333
Stock	334
Control	334
Property Basis	334
Stock Basis	335
Liabilities	335
Incorporation of a Partnership	336
Accounts Receivable	340
Review Questions	341
Section 1244 Stock	343
Maximum Ordinary Loss	343
Original Issuance	343
General Requirements	343
Start-Up Expenses	344
Covered Expenses	344
Organizational Expenses	345
Definition	345
Stock Issuance & Syndication Expenses	346
Amortization	346
Tax Recognition of the Corporate Entity	346
Tax Criteria	346
Having Income Attributed to the Corporation	347
Section 269A	348
Capital Gains & Losses	348
Net Capital Loss Carryovers & Carrybacks - §1212	349
Asset Types	349
Five-Step Characterization Process	350
Netting Capital Gains	350
Netting Section 1231 Gains (Losses)	351
NOL Carryback & Carryover - §172	351
Dividends Received Deduction - §243	352
Dividends from Domestic Corporations	352
Ownership	353
Limitation	353
Denial of Deduction	353
Debt-Financed Portfolio Stock	354
Property Dividends	354
Holding Period Focus	354
Review Questions	354
Charitable Contributions - §170	356
Timing of Deduction	356
Limitation	356
Carryover of Excess Contribution	357
Personal Holding Companies - §541	357
Penalty Tax	357
Accumulated Earnings Tax Trap - §531	358
Imposition of Penalty Tax	358
Reasonable Accumulations	360
Tax Exempt Income	361
Review Questions	362
Accounting Periods & Methods	363
Accounting Periods	363
Accounting Methods	367
Inventories	370
Identification Methods	370
Valuation Methods	371
Multiple Corporations	372
Controlled Group Restrictions	373
Consolidated Returns	374
Corporate Liquidations & Distributions	374
The Old General Utilities Doctrine	375
Review Questions	376

CHAPTER 6 Corporate Principals & Employees378

Employee Status of Active Shareholders	378
Payroll Tax Withholding & Reporting	378
Social Security's Payroll Tax or FICA - §3111 & §3121	382
Federal Unemployment (FUTA) Tax - §3301 & 3306	382
Employee Labor Laws	383
Employee vs. Contractor Status	384
Factors	385
Unreasonable Compensation	386
Overall Limitation	387
Scope of Examination	387
Factors	388
Income Splitting	390
Gift & Redemption	390
Hire the Kids & Spouse	390
Review Questions	391
Buy Sell Agreements	392
Definition	392
Professional Corporations	392
Marketability Problems	392
Controlled Disposition	393
Entity & Cross-Purchase Agreements	393
Funding the Buy-Sell Agreement	397
Purchase Price	398
S Corporations	398
Sole Shareholder Planning	399
Recapitalization	400
In General	400
Valuation of Stock	401
Estate Freeze Provisions	401
Stock Dividends	401
Section 306 Tainted Stocks	402
Review Questions	402

CHAPTER 7 Basic Fringe Benefits405

Concept	405
Definition of Income - §61	405
Deductions without Taxable Income	405
Benefit Mechanics	406
Discrimination	406
No-Additional-Cost Services - §132(b)	407
Qualified Employee Discounts - §132(c)	408
Working Condition Fringes - §132(d)	408
De Minimis Fringes - §132(e)	409
Employee Achievement Awards - §74(c) & §274(j)	410
Group Term Life Insurance - §79	412
Review Questions	412
Dependent Care Assistance - §129	413
Cafeteria Plans - §125	414
Meals & Lodging - §119	416
Self-Insured Medical Reimbursement Plans - §105	417
Employee Educational Assistance Programs - §127	417
Employer-Provided Automobile - §61 & §132	418
Interest-Free & Below-Market Loans - §7872	420
Moving Expenses - §217	422
Employer-Provided Retirement Advice & Planning - §132	423
Financial Planning - §67 & §212	423
Tax Planning - §67 & §212	424
Estate Planning - §67 & §212	424
On-premises Athletic Facility - §132(j)(4)(B)	425
Home Office - §280A	425
Fringe Benefit Plans for S Corporations	426
Insurance	426
ERISA Compliance	427
Welfare Plans	427
Review Questions	428

CHAPTER 8 Business Entertainment431

Entertainment	431
Statutory Exceptions - §274(e)	432
Lavish or Extravagant Restriction	434
Ordinary & Necessary Requirement	434
Business Meals	434
Entertainment Facilities	436
Review Questions	438
Substantiation & Record Keeping - §274(d)	439
Travel Expense Items to be Substantiated	439
Meal Expense Items to be Substantiated	440
Business Gifts Expense Substantiation	440
Substantiation Methods	440
Exceptions to Substantiation Requirements	442
Payback Agreements	443
Employee Expense Reimbursement & Reporting	443
Unreimbursed Employee Expenses	443
Reimbursed Employee Expenses	444
Self-Employed Reimbursement & Reporting	454
Expenses Related to the Self-Employed's Business	454
Reimbursed Expenses Incurred on Behalf of a Client	454
Employers	455
When Can an Expense Be Deducted?	455
Nondeductible Meals	456
Employer-Provided Auto	456
Review Questions	456

CHAPTER 9 Insurance458

Company Paid Insurance	458
Popularity	459
Types of Life Insurance	459
Group Term Life - §79	459
Popularity and Application	460
Coverage & Premiums	460
Medical Examination	462
Regulations	462
Retired Lives Reserve	465
Estate Planning Considerations	469
Review Questions	470
Split-Dollar Life	472
Business Travel Accident Insurance	475
Medical & Dental Insurance	475
Disability Income Insurance	475
Interest Limitation on Policy Loans - §264A	476
Disallowance of Interest Deduction	476
Impact	476
Limit on Deductibility of Premiums & Interest	477
Key Person Life Insurance	477
Closely Held Corporations	477
Sole Shareholder Applications	478
COBRA	478
VEBAs - §501(c)(9) Trusts	478
Section 419	479
Self Insurance	479
Severance Pay	479
Post-Retirement Medical Benefits	479
VEBA Taxation on Earnings	480
Nondiscrimination Rules Applied	480
Controlled Groups	480
Termination	480
Disqualified Benefits	480
Conclusion	481
Review Questions	481

CHAPTER 10 Nonqualified Deferred Compensation483

Postponement of Income	483
Advantages	484
Purposes & Benefits	485
Benefit Formula	485
Contractual Arrangement	485
Tax Status	486
Constructive Receipt	487
Economic Benefit	490
Review Questions	494
Unfunded Bare Contractual Promise Plan - Type I	495
Funded Company Account Plan - Type II	497
Segregated Asset Plan - Type III	501
Tax Consequences	504
Accounting	507
Estate Planning Considerations	508
Withholding, Social Security & IRAs	510
Review Questions	510

CHAPTER 11 Corporations513

Introduction	513
Advantages	514
Disadvantages	516
Passthrough Entities - 20% Deduction	517
Becoming an S Corporation	517
S Corporation Status	519
Election Requirement	527
Review Questions	529
S Corporation Termination	531
Revoking the Election	532
Ceasing to Qualify	534
Passive Income - §1362	534
S Termination Year	535
Taxation of S Corporations	536
S Corporation Income & Expense	537
Reduction of Pass-Thru Items	539
Built-In Gain - §1374	540
Passive Income - §1375	543
Tax Preference Items	546
LIFO Recapture Tax	547
Figuring Corporate Taxable Income	547
Recapture of Investment Credit	547
Estimated Corporate Tax Payments	548
Review Questions	548
Basis of Stock & Debts	550
Reasonable Compensation	554
Related Party Rules	554
Distributions	556
Taxable Year	561
Form 1120S	562
Fringe Benefits	565
Health Insurance Premiums	566
Entity Tax Comparison	567
Review Questions	571

CHAPTER 12 Business Dispositions & Reorganizations574

Starting a New Business	574
Organization Costs	574
Start-up Costs	575
Syndication Costs	575
Buying an Existing Business	575
Finding a Business for Sale	576
Tax Considerations	577
Practical Considerations	580
Reorganizations - §368	581
Types of Reorganizations	581
Type 1 Reorganizations	582
Type 2 Reorganizations	583
Type 3 Reorganizations	584
Type 4 Reorganizations	584
Type 5 Reorganizations	585
Type 6 Reorganizations	585
Type 7 Reorganizations	585
Bona Fide Business Purpose	585
Carryover of Corporate Tax Attributes	586
Mandatory Carry-Over	586
Review Questions	587

Answers & Explanations589

Glossary655

Index of Key Words & Phrases657

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: 3/24/26

Course Exam Questions (online): 200 (multiple-choice)

Program Delivery Method: Self-Study (NASBA QAS Self-Study)

Available Formats of Course Text: Downloadable PDF, Printed/Mailed

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 I.D.: 107615

CFP Board Sponsor I.D.: 1008 — Course I.D.: 332328

IRS Qualified Sponsor I.D.: FWKKO — Course I.D.: FWKK0-T-00769-26-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