ACC 209 - Advanced Issues in Tax Preparation

1. Analyze complex individual tax scenarios to determine defensible taxpayer filing positions in compliance with the Internal Revenue Code and Treasury Regulations.
2. Prepare a basic Form 1041 tax return for estates and non-grantor trusts, including Distributable Net Income (DNI) basic reporting Schedule K-1 for beneficiaries.
3. Evaluate complex corporate and partnership issues, including basis calculation, and elections that affect economic outcomes, such as §754 election and related §743(b) adjustments.
4. Apply reporting requirements for non-standard entities, including exempt organization filings (Form 990 series and Form 990-T) and information reporting by certain U.S. persons with respect to foreign corporations (Form 5471), to assist with regulatory compliance.
5. Execute advanced electronic tax preparation techniques to prepare and review returns efficiently, including filing diagnostics and documentation standards.

1. The Professional Framework for Tax
   1. The Hierarchy of Tax Authority: Distinguishing between Statutory - Internal Revenue Code (IRC §), and Administrative - Treasury Regulations, Revenue Rulings, and Court Cases.
   2. Ethics & Circular 230: The Standard of Conduct and Due Diligence. Substantial Authority, versus Reasonable Basis and preparer penalties (§6694).
   3. Advanced Electronic Research: Using research tools.
2. Complexity in Individual & Investment Reporting
   1. Loss Limitations: Interaction of Basis, At-Risk (§465), and Passive Activity Loss (PAL) rules (Form 8582).
   2. Real Estate Professionals: §469(c)(7)” Material Participation” and specialized rental activity rules.
   3. Investment Income issues: wash sales (§1091), constructive sales (§1259), and specialized Schedule D transactions.
   4. The “Shadow Taxes”: Alternative Minimum Tax (AMT) mechanics (Form 6251) and the Net Investment Income Tax (NIIT - §1411)
3. Pass-Through Entities and Structural Adjustments
   1. S-Corporations: Form 7203 (Stock/Debt Basis) and the nuances of “Reasonable Compensation.”
   2. Partnership “Step-Up or Step Down”: mechanics of §754 elections and §743(b) adjustments.
   3. Corporate Reorganizations (§368) – basis consequences (§358, §362) and nonrecognition exchanges (§351, §721) and overview of §1031 issues. 
   4. Qualified Business Income (QBI) Deduction (§199A): Dealing with SSTB (Specified Service Trade or Business) phase-outs.
4. Introduction to Fiduciary Taxation (Form 1041)
   1. Overview of Subchapter J: Taxation of Estates and Non-Grantor Trusts.
   2. Differentiating between Decedent’s Estate and Trust, and Simple vs. Complex Trusts.
   3. Governing Instrument and: Reviewing Wills and Trusts
   4. Calculating Fiduciary Accounting Income under the Uniform Income and Principal Act (UPIA).
   5. Unique environment: capital gains and exclusion from Distributable Net Income (DNI) unless allocated in income and treated as distributed under the instrument/state law.
5. Preparing the Fiduciary Return
   1. Detailed calculation of DNI under §643(a).
   2. Calculating and applying the Income Distribution Deduction (IDD).
   3. Separate share rule (§663(c)), 65-day election (§663(b)) and special bequests excluded under §663(a)
   4. Preparation of Form 1041, including specific income, deductions, and credits.
   5. Preparation and delivery of Schedule K-1 (Form 1041) for beneficiaries.
   6. Advanced issues:  § 645 election, capital gains, the 65-day rule, § 663 election, the “winding up” process and excess deductions under §662(h).
6. Other Forms and Specialty Taxation
   1. Tax-exempt organizations - Form 990 returns and Unrelated Business Taxable Income (UBTI – Form 990-T).
   2. International Red Flags: Form 5471 (Foreign Corporations), Form 5472 (Foreign Controlled Entities), FBAR, FinCEN114 and Form 8938.
   3. Disclosure issues and information returns.
7. Tax Administration and Enforcement
   1. The IRS Audit Process and responding effectively to client notices.
   2. The audit process from Information Document Requests (IDR) to Appeals
   3. Statute of Limitations §6501, 3-year, 6-year substantial omission and no limitation for fraud or failure to file.
   4. Penalty abatement and reasonable cause
8. Fundamentals of Tax Research
   1. Tax Authority: Statutory, Administrative, and Judicial Sources.
   2. Techniques for using professional electronic tax research databases (e.g., keyword search, citation lookup).
   3. Developing a research plan and documenting the findings.
   4. Drafting a formal Tax Research Memorandum to communicate complex conclusions.
9. Capstone
   1. Case studies require simultaneous research and electronic preparation.
   2. Integrating research findings (authorities, conclusions) directly into the tax preparation file.
   3. Diagnostics and overrides in tax preparation software.
   4. Review of quality control procedures and final electronic filing protocols.