 1040, Small Business,
Estates & Trusts  
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The standard for fast-answer small business tax books!
Recommended User
Professionals who want small business compliance and planning information in a separate book. Note: The 1040 Edition is the perfect compliment to the Small Business Edition. Coverage Highlights
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Click here for information in the Small Business not in the Deluxe Edition
Tab SB1 What's New
What's New - 2008 and Beyond • Tax Rates • Section 179 Limits • Standard Mileage Rates • Pension Plan Limits • HSA Limits • Minimum Wage • Credit for Employer FICA Taxes Paid on Tips • Husband and Wife Business • Domestic Production Activities Deduction • Inherited Retirement Plans • Roth 401(k) Plans • Rollovers and Transfers • Vesting Rules for Qualified Plans • Diversification Rules for Defined Contribution Plans • Deduction Limitations for Defined Benefit Pension Plans • Minimum Funding Standards for Defined Benefit Pension Plans • Age 62 Distributions During Working Retirement • Investment Advice • Work Opportunity Tax Credit • Low-Income Housing Credit • Alternative Motor Vehicle Credit • Leasehold Improvements and Restaurant Property • Self-Created Musical Works • Medicare Part B Premiums Increase for High Income Taxpayers • S Corporation Late Election Relief • S Corporation Taxes • S Corporations - Bank Director Stock • S Corporations - Qualified Subchapter S Subsidiary (QSub) • S Corporations - Electing Small Business Trust (ESBT) • S Corporations - Elimination of Earnings and Profits Attributable to Pre-1983 Years • Estimated Tax for Corporations • Form 1120-A Corporation Short Form Eliminated • Health and Medical Benefits • Company-Owned Life Insurance Contracts • Form 5500 Filing Requirements • Exempt Organizations Below the Filing Requirements • Demolition and Clean-up Costs - Gulf Opportunity Zone • Involuntary Conversions • Employer Identification Numbers • Circular 230 Amendments • Miscellaneous Rulings and Court Decisions •
Tab SB2 C Corporations
C Corporation Income Tax Rate Schedule, Form 1120 chart • Filing Deadline - Corporations • Extension of Time to File • Where to File • Penalties • Filing Requirements • Schedules Attached to Form 1120 • Special Returns for Certain Organizations chart • Short Form - Corporation Return • Form 8886 - Reportable Transaction Disclosure Statement • Corporations • Businesses Taxed as Corporations • Legal Aspects of Corporations • Employee/Shareholders • C Corporation Taxation • Estimated Tax • Depositing Taxes • Quick Refund of Overpayment of Estimated Tax • Amended C Corporation Return • Change of Name or Address • C vs. S Corporation Comparison • Capital Contributions • IRC Section 351 - Nontaxable Transfers • Use Caution When Transferring Personal Assets • Stock • C Corporation Advantages • Fringe Benefits • Rents and Royalty Payments • Employer-Provided Living Expenses (§119) • Loans • Losses on Small Business Stock (§1244) • Gains on Small Business Stock (§1045 and §1202) • Income and Expenses of a Corporation • Capital Losses • Capital Gains • Charitable Contributions • Dividends Received Deduction • Corporate Net Operating Loss (NOL) • Corporate Alternative Minimum Tax (AMT) • Shareholder Wages • Employee-Shareholder • Distributions to Shareholders • Dividends • Constructive Dividends (Taxable Distributions) • Form 1099-DIV • Form 5452, Corporate Report of Nondividend Distributions • Earnings and Profits (E&P) • Earnings and Profits Defined • Check the Box Rules - Entity Classification Election • Basic Classification Rules • Accumulated Earnings Tax • Personal Service Corporations (PSCs) • Personal Holding Companies (PHCs) • Homeowners' Associations Form 1120, 1120-H, or 990 Series • Homeowners' Associations - IRC §528 • Types of Homeowners' Associations • Choice of Tax Form • Stock Redemptions (IRC §302) • Tax Planning with Stock Redemptions and Liquidations • Corporate Reorganizations • Qualifications for Tax-Free Reorganization • Distributions of Stock Under Reorganization • Corporate Liquidations • Complete Liquidation - C or S Corporations • Liquidation of Subsidiary Corporation • Election to Treat Stock Purchase as Asset Acquisition • Liquidation Example • C Corporation Example • Scenario • Organizational Costs and Start-Up Costs • Purchase of Assets • Payroll Report for Year chart • 2008 Depreciation Schedule • Balance Sheet • Income Statement • Cash Flow Statement • Form 1120 • Other Expenses - Line 26, Form 1120 • Line-by-Line Explanation of C Corporation Example - Page 1, Form 1120 • Income • Deductions • Schedule L, Balance Sheet per Books • Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return • Depreciation Worksheet •
Tab SB3 S Corporations
Filing Requirements • Schedule K-1 Due Date • Filing Deadline • Amended Form 1120S • Penalties • Income and Taxation Summary - Corporations and Partnerships chart • S Corporation Advantages/Disadvantages • Relief from Late S Corporation Elections - Revenue Procedures chart • Basics of S Corporations • S Corporation Formation • S Corporation Qualifications • Ineligible Corporations • One-Class-of-Stock Rule • Form 2553, Election by a Small Business Corporation • Relief for Late S Elections • Termination of S Corporation Status • Inadvertent Termination • Five-Year Waiting Period for Reinstatement • Treatment of S Corporation Termination Year • Flow-Through to S Corporation Shareholders • Ordinary Business Income • Pro-Rata Allocation/Per-Share/Per-Day • Separately Stated Items • Shareholder Basis • S Corporation Shareholder's Basis • S Corporation Shareholder's Basis Adjustments • Loans • Basis and Adjustments for Multiple Acquisitions • Multiple Acquisitions • Basis and Adjustments for Multiple Loans • Basis of S Corporation Stock Upon Conversion from C Corporation • Discharge of Indebtedness • Distributions • S Corporations With No Earnings and Profits • S Corporations With Earnings and Profits • Accumulated Adjustments Account (AAA) • Other Adjustments Account (OAA) • Ordering Rules • Election to Distribute Earnings and Profits First • Deemed Dividends • Making the Elections • Previously Taxed Income (PTI) • Post Termination Transition Period (PTTP) • S Corporation Taxes • S Corporation Pass Through • Excess Net Passive Income Tax (§1375) • Built-In Gains Tax (BIG) (§1374) • Investment Credit Recapture Tax • Last-In-First-Out (LIFO) Recapture Tax • Tax Payments • Miscellaneous S Corporation Issues • Employee Business Expense for S Corporation Shareholder • Shareholder's Use of Home • Reasonable Compensation • No Carryovers Between C and S Year • Fringe Benefits for S Corporation Shareholders • S Corporation Conversion to LLC • S Corporation Example • Scenario • Organizational and Start-Up Costs • Purchase of Assets • Other Expenses - Line 20, Form 1065 • Payroll Report for Year chart • 2008 Depreciation Schedule • Balance Sheet • Income Statement • Cash Flow Statement • Form 1120S • Line-by-Line Instructions - Form 1120S • Trade or Business Income • Deductions • Cost of Goods Sold - Schedule A • Schedule K - Shareholders Shares of Income, Deductions, Credits, etc. • Deductions • Schedule L - Balance Sheet per Books • Schedule M-1 - Reconciliation of Income (Loss) per Books with Income (Loss) per Return • Schedule M-2 • S Corporation Stock Basis Worksheet for Multiple Blocks •
Tab SB4 Partnerships and LLCs
Penalties • Electronic Filing • Limited Liability Companies (LLCs) • Filing Deadlines • Extensions - automatic six-month extension of time to file Form 1065 • Filing Requirements • Treatment of Self-Employment for State Taxation of Retirement Income • Partnership Advantages/Disadvantages • Partnerships • Partnership Defined • Husband-Wife Partnerships • Family Partnerships • Exclusion From Partnership Treatment • General and Limited Partners • Fundamentals of Partnership Taxation • Partnership Tax Year • Partnership Income and Expenses • Elections • Trade or Business Income (Loss) • Distributive Share • Guaranteed Payments • Separately Stated Items • Limit on Losses • Fiscal Year Issues • Change in Partnership Interest • Unreimbursed Partnership Expenses • Basis • Partner's Basis (Outside Basis) • Effect of Partnership Liabilities • Services in Exchange for Partnership Interest • Alternative Rule for Computing Partner's Basis • Partnership's Basis (Inside Basis) • Partnership Capital Account • Built-in Gain or Loss [§704(c)] • Code Section 754 Election to Adjust Basis of Partnership Property • Section 754 Election - Example • Partnership Distributions • Tax Effects of Distributions • Current Distributions • Liquidating Distributions • Liabilities • Sale of Partnership Interest • Disguised Sale Rules [Reg. §1.707-3(b)] • Certain Distributions Treated as Sales or Exchanges • Payments for Unrealized Receivables and Inventory Items • Liquidation at Partner's Retirement or Death • Distribution of Inventory • Form 8308, Report of a Sale or Exchange of Certain Partnership Interests • Terminating a Partnership • Limited Liability Companies (LLCs) • Conversion of Single-Member LLC to Multiple-Member LLC (Rev. Rul. 99-5) • Conversion of Multiple-Member LLC to Single-Member LLC (Rev. Rul. 99-6) • Limited Liability Partnerships (LLPs) • Publicly Traded Partnership (PTPs) • Partnership Example • Scenario • Organizational Costs and Start-Up Costs • Purchase of Assets • Other Expenses - Line 20, Form 1065 • 2008 Depreciation Schedule • Balance Sheet • Income Statement • Cash Flow Statement • Payroll Report for Year chart • Form 1065 • Line-by-Line Explanations - Form 1065 • Income • Deductions • Schedules K and K-1 - Form 1065 • Analysis of Net Income (Loss) • Schedule L - Balance Sheets per Books • Schedule M-1 • Schedule M-2 - Analysis of Partners' Capital Accounts • Where to Report Income and Expenses - Form 1065 chart •
Tab SB5 Depreciation
MACRS Recovery Periods for Commonly-Used Assets chart • 3-, 5-, 7-, 10-, 15-, and 20-Year Property Half-Year Convention Depreciation Rates chart • Maximum Section 179 Deduction and Investment Limit chart • MACRS Percentage Charts • MACRS 200% Declining-Balance charts • Short-Year Depreciation - Short Cut Percentage Method chart • Recovery Periods charts • Depreciation Methods charts • Form 4562, Depreciation and Amortization • Form 4562 • Basics of Depreciation • What Can Be Depreciated • Excluded Property • Placed in Service Date • Regular MACRS/Alternative Depreciation System • Regular MACRS • Alternative Depreciation System (ADS) • Conventions • Short Tax Year Depreciation • Short Tax Year Conventions • Computing Depreciation in a Short Tax Year • Section 179 Expense • Section 179 Election/Revocation • Section 179 Qualifying Property • Section 179 Nonqualifying Property • Section 179 Limitations • Section 179 Carryovers • Corporations and Partnerships - Section 179 • Section 179 Recapture • Special Depreciation Allowance (GO Zone and Liberty Zone Property) • Gulf Opportunity Zone (GO Zone) Disaster Areas • Gulf Opportunity Zone (GO Zone) Property • New York Liberty Zone Property (IRC §1400L) • Intangible Assets • Section 197 Intangibles • General Asset Accounts • Depreciation Adjustments for Alternative Minimum Tax • AMT Depreciation Adjustments • Correcting Depreciation Errors • Correcting Depreciation on an Amended Return • Form 3115, Application for Change in Accounting Method • Section 481 Adjustment • Miscellaneous Depreciation Issues • Income Forecast Method [IRC §167(g)] • Abandonment • Qualified Leasehold Improvement Property • Qualified Restaurant Property • Idle Property • Cooperative Apartments • Depletion • Depletion Allowance • Depreciation for Like-Kind Exchanges and Involuntary Conversions • Depreciating Replacement Property • Expensing Policy •
Tab SB6 Retirement
Where To Deduct Qualified Pension Plan and IRA Contributions chart • Pension Plan Limitations chart • 10% Penalty on Early Distributions from Qualified Retirement Plans and IRAs chart • Pension Plan Characteristics chart • Pension Plan Advantages/Disadvantages chart • Can a distribution from a plan in the first column be rolled over into a plan in columns 2 through 11 chart • Small Business Retirement Plans • Qualified Retirement Plans • Defined Contribution Plans • Defined Benefit Plans • 401(k) Plans • Simplified Employee Pensions (SEPs) • Savings Incentive Match Plans for Employees (SIMPLE plans) • How to Set Up a Qualified Plan • Minimum Funding Requirement • Contributions • Employer Deduction • Qualified Roth Contribution Program • Distributions • Vesting Rules • Prohibited Transactions • Reporting Requirements • Individual Retirement Arrangement (IRA) • Rollovers and Transfers • Nonqualified Deferred Compensation Plans • Section 409A Rules •
Tab SB7 Fringe Benefits
HSA Limitations chart • Archer MSA Limitations chart • Taxable Fringe Benefits • 2008 Medical Fringe Benefit Plans chart • Who Qualifies as Employees? chart • Employee Fringe Benefits • Tax Treatment of Fringe Benefits • Who Are Considered Employees for Tax-Favored Fringe Benefit Purposes? • Nondiscrimination Rules for Fringe Benefits • No-Additional-Cost Services [IRC §132(b)] • Employee Discounts [IRC §132(c)] • Working Condition Fringe Benefits [IRC §132(d)] • De Minimis Fringe Benefits [IRC §132(e)] • On-Premises Athletic Facilities [IRC §132(j)(4)] • Transportation Benefits [IRC §132(f)] • Moving Expense Reimbursements [IRC §132(g)] • Retirement Planning Services [IRC §132(m)] • Dependent Care Assistance Program (IRC §129) • Educational Assistance Program (IRC §127) • Employee Achievement Awards [IRC §74(c)] • Meals and Lodging (IRC §119) • Health Benefits (IRC §105 and §106) • Health Savings Accounts (HSAs) (IRC §223) • Archer MSAs (IRC §220) • Group Term Life Insurance (IRC §79) • Cafeteria Plans (IRC §125) • Employer-Provided Vehicles •
Tab SB8 Business Deductions
Business Deductions - Fast Look Chart • NOL Carry Back/Carry Forward Rules chart • Reporting Reimbursements chart • Cash or Accrual Method chart • Schedule C chart • Employer Identification Number (EIN) chart • Accountable/Nonaccountable Plans • Per Diem • Inventory/Cost of Goods Sold • Inventory • Cost of Goods Sold • Inventory Valuation Methods • Valuing Inventory Using FIFO or LIFO • Uniform Capitalization Rules (UNICAP) • Net Operating Loss (NOL) • What is a Net Operating Loss (NOL)? • How to Calculate an NOL • How to Use an NOL • How to Calculate an NOL Carry Forward • Organization/Start-Up Costs • Domestic Production Activities Deduction (Manufacturer's Deduction) • Deduction Percentage • Who Qualifies for the Deduction? • Terminology and Definitions • Construction Activities • Farm Activities • Partnerships and S Corporations • Coordination With Other Deductions • Accounting Periods and Methods • Accounting Methods • Cash • Accrual • Exceptions to the Accrual Method Rule for Inventory • Hybrid • Prepaid Expenses • Change in Accounting Method • Accounting Periods • Required Tax Year for Partnerships • Required Tax Year for S Corporations and PSCs • Business Purpose Tax Year • Section 444 Election •
Tab SB9 Business Credits
Report on Form 3800 chart • General Business Credit • General Business Credit - Form 3800 • Credit for Increasing Research Activities - Form 6765 • Low Income Housing Credit - Form 8586 • Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips - Form 8846 • Credit for Small Employer Pension Plan Startup Costs - Form 8881 • Disabled Access Credit - Form 8826 • Credit for Employer-Provided Childcare Facilities and Services - Form 8882 • Work Opportunity Credit and Welfare-to-Work Credit - Form 5884 • Energy Efficient Home Credit - Form 8908 • Investment Credit - Form 3468 • Indian Employment Credit - Form 8845 • New Markets Tax Credit - Form 8874 • Credit for Contributions to Selected Community Development Corporations - Form 8847 • Credit for Alcohol Used as Fuel - Form 6478 • Biodiesel and Renewable Diesel Fuels Credit - Form 8864 • Enhanced Oil Recovery Credit - Form 8830 • Renewable Electricity, Refined Coal, and Indian Coal Production Credit - Form 8835 • Vehicle Credits • Alternative Motor Vehicle Credit • Alternative Fuel Vehicle Refueling Property • Qualified Electric Vehicle Credit •
Tab SB10 Estates, Trusts, and Fiduciaries
Annual Exclusion for Gifts chart • Form 1041 Projected Federal Tax Rate Schedules • Form 1041 chart • Form 706, Estate Tax Return • 2007 - 2009 Estate and Gift Tax Rate Schedule • Estate Tax Exclusion chart • Gift Tax Exclusion chart • Form 709, Gift Tax Return • Form 709 chart • State Estate and Inheritance Tax • States with Estate or Inheritance Tax • Form 1041, Schedule K-1 Code Sheet • Death of Taxpayer • Property Passing at Death • Probate • Wills and Intestacy • Personal Representatives • Revocable Trusts at Death • Income in the Year of Death • Income in Respect of Decedent (IRD) • Wages • U.S. Savings Bonds at Death • Decedent's Final Form 1040 • Who Files and Signs • Filing • Income • Deductions • Credits • Form 1041 Income Tax Return for Estates and Trusts • Accounting Income • Simple and Complex Trusts • Other Entities • Estate Year • Income • Capital Gains and Losses • Tax-Exempt Income • Deductions • AGI and AMID Calculation • Termination Year • Charitable Deductions • Income Distribution Deduction - Schedule B • Distributable Net Income (DNI) • Distributions • Schedule K-1 • Grantor Trusts • Grantor Trust Filing Methods • Estate and Gift Tax • Estate Tax Repeal • Generation-Skipping Transfer Tax (GST) • Marital Deduction • Marital Estate Tax Planning • Charitable Deduction • Valuation • Gifts • Gifts Subject to Gift Tax • Loans • Joint Tenancies • Not Gifts • Gift Tax Exclusion • Annual Exclusion • Gifts - Think Twice Before Giving • Gifts of Joint Tenancies • Gift Splitting • Form 706 Estate Tax Return • Gross Estate • Deductions • Deduction for Estate Tax Paid on IRD • Basis • Basis of Inherited Property (IRC §1014) • Basis of Gifts (IRC §1015) • Types of Trusts and Terms • Types of Trusts •
Tab SB11 Payroll and Labor Laws
Form 941 - Payroll Deposit Schedule chart • Payroll Deposit Penalties chart • 2008 Employer's Payroll Tax Calendar • 2008 Federal Withholding - Percentage Method • Payroll Tax Deposit Rules • Deposit Requirements • Deposit Penalties • Form W-4 • Form 941 • FICA Tax • Employer's Quarterly Return (Form 941) • Forms W-2 and W-3 • Form 940 • FUTA Tax • Form 940-EZ • Special Rules for Various Types of Employment • Trust Fund Recovery Penalty • Non-Employee Payments for Work Performed by Outside Workers • Form 1099-MISC • Other Payroll Issues • Payroll Record Keeping • Advanced Earned Income Credit • Fringe Benefits • Gross-Up Computation • Supplemental Wages • Labor Laws • Fair Labor Standards Act (FLSA) • Family and Medical Leave Act • Equal Employment Opportunity (EEO) • Occupational Safety and Health Act of 1970 (OSHA) • New Hire Reporting Requirements •
Tab SB12 Choosing a Business Entity
Issues to Consider When Choosing a Business Entity chart • Preliminary IRS Business Return Enforcement Results chart • Online Business Resources chart • Business Failures chart • Employer Identification Number (EIN) chart • Statutory Nondeductible Expenses • 2008 Federal Tax Rate Schedule • 2008 Section 179 Deduction chart • Which Forms to File chart • Expense Verification chart • Social Security/Medicare chart • Choice of Business Entity Questionnaire • Domestic Business Entity - Tax Organizer • 2008 Business Entity Comparison Chart • Financing - Small Business Administration • Basic 7(a) Loan Guaranty • Certified Development Company (CDC) • Microloan Program • Loan Prequalification • Selling to the U.S. Government • Federal Acquisition Regulation (FAR) • Contracting Methods • Consolidated Purchasing Programs • Patents, Trademarks, and Copyrights • Glossary of Business Terms • Special Rules for Various Types of Fringe Benefits chart •
Tab SB13 Other Business Topics
Where to File Business Returns chart • Learning to Prepare Income Tax • Returns for Partnerships/Corporations • Starting with Schedule C (Form 1040) • Structure and Taxation of Business Entities • Diamond Star Partnership • Scenario • Effect on Forms 1040 of Partners • Corporations • Sale of a Business • Asset Acquisition Statement • Classes of Assets • Sale of Business Planning Issues • Self Employment Tax - Sale of Business • Inventory - Sale of Business • Corporation - Sale of Business • Sale of Business Examples • C Corporation - Sale of Business Example • S Corporation - Sale of Business Example • Partnership - Sale of Business Example • Book to Tax Adjustments • Income per Books vs. Taxable Income • Contributed Property Depreciation • Book to Tax Adjustments - Schedule M-1 chart • Tax Professionals Going Paperless • Are You Smarter Than a 5th Grader? • IRS Publications Index •
Tab SB14 Financial Planning, Social Security, Exempt Organizations
Victims of Credit Card Fraud or Identity Theft • Social Security and Medicare Highlights • Social Security • Social Security Basics • How Benefits Are Calculated • Full Retirement Age • Early Retirement Reduced Benefits • How Work Affects Retirement Benefits • Work Incentives for Disabled Workers • Supplemental Security Income (SSI) • Monthly Federal SSI Payment Maximums • Medicare • Medicare Part A Coverage • Medicare Part B Coverage • Part A Premiums • Part B Premiums • Medicare Part C Coverage • Medicare Prescription Drug Plan (MPDP) - Part D • Coverage Gap ("Donut Hole") • Medigap (Medicare Supplemental Insurance) • Medicare Medical Savings Account (MSA) • Low Income Help for MPDP • Employer or Union Plan Coverage • Medicare Card • Medicare Appeals and Grievances • Medicare Fraud • Medicaid • Medicaid Overview • When Eligibility Starts • What is Not Covered • Tax-Exempt Organizations • Tax-Exempt Qualifications • Which Form to Complete • Filing Requirements • New Form 990-N • Filing Deadline and Extensions • Penalties • Intermediate Penalties • Common Types of Non-Profits • Nonprofit Components • Advantages • Nonprofit Responsibilities • Applying for Exempt Status • New User Fees • New Form 990 for 2008 • Private Foundations • Organization Reference Chart • Unrelated Business Income Tax • Unrelated Business Income • UBIT Filing Requirements - Form 990-T • Case Study - PB&J Fastpitch Association • 2008 Activity • Exceptions • PB&J Planning Tips • Form 990 • Form 990-T • Financial Planning • Buy-Sell Agreements • Beat Inflation • Financial Planning Tips • Start Early • Credit Counselors • Debt Management Plan (DMP) • Debt Negotiation Programs •
Tab SB15 Business Tools and Worksheets
Business Agreements • Section 351 Statements • Principal Business Activity Codes for Corporations and Partnerships • S Corporation Shareholder's Adjusted Basis Worksheet • Partner's Adjusted Basis Worksheet (Outside Basis) • 2008 W-4 and Estimated Tax Worksheet • NOL Business/Nonbusiness Allocation Worksheet • Depreciation Worksheet • Organizational and Start-Up Costs Amortization Election Statement • Simplified Production Method under Section 263A • Worksheet to Reconcile Amounts Reported in Name of Decedent on Information Returns • Cash Flow Statement • Estate Inventory Worksheet •
Tab SB16 States Business Tax Summary
Business Return Filing Requirements • Sales and Use Tax • Tax Rate Schedules • State Web Sites • Contact Information •
