Accumulated Earnings and Deferred Compensation

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Course Number:42
Category:Executive Compensation
Field of Study:Taxes
Audience:Compensation Professionals, HR Managers, HR Generalists
Level of Difficulty:Advanced
Delivery Method:QAS Self Study
Prerequisites: Moderate algebraic training
Advanced Preparation:None
SHRM BASK:As defined by the SHRM Body of Applied Skills and Knowledge (BASK), this self-study course relates to competencies in Business Analysis with functional areas in Total Rewards and U.S. Employment Law and Regulations.
OverviewTaxes are an important consideration when deciding how to distribute a closely held company’s earnings. This course covers the tax implications of accumulated earnings and how applicable IRS rules seek to encourage dividend distribution over retaining excess earnings in the company. Then it will look at how the IRS identifies personal holding companies and how it views passive sources of income. Finally, there will be an examination of the tax treatment of different kinds of deferred compensation with an emphasis on nonqualified plans such as supplemental executive retirement plans (SERPs), rabbi and secular trusts, nonqualified stock options (NSOs), restricted stock, stock appreciation rights (SARs), and golden parachutes.
Learning Objectives:
  • Identify IRS acceptable uses for retained earnings
  • Specify how intent determines whether the accumulated earning tax will be levied
  • Identify reasonable business needs
  • Calculate the reasonable working capital needs of a corporation using the Bardahl formula
  • Specify how the Accumulated Earnings Tax is calculated
  • Define the tests that the IRS uses to identify Personal Holding Companies
  • Recognize what passive income is for a company
  • Specify how the Personal Holding Company tax is calculated
  • Recognize different types of deferred compensation plans, who may benefit from them, whether they are funded or not, and how they are taxed
  • Specify why companies have golden parachutes for their executives, identify disqualified individuals, and recognize an excessive golden parachute and how it is taxed
Credit & Professional
Continuing
Education Information:

  • SHRM-CP/SHRM-SCP Credit Information:

    ERI Distance Learning Center is recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP® or SHRM-SCP® recertification activities. This program is valid for 2.5 PDCs for the SHRM-CP® or SHRM-SCP®. For more information about certification or recertification, please visit www.shrmcertification.org.

    SHRM Preferred Provider

  • aPHR/PHR/SPHR/GPHR Credit Information:

    ERI Distance Learning Center is a recognized provider of recertification credits. The HR Certification Institute® (HRCI®) has pre-approved this activity for 2.5 HR (General) credit hour(s) towards aPHR™, PHR®, SPHR®, and GPHR® recertification.

    HRCI Approved Provider
    HR Certification Institute’s® (www.HRCI.org) official seal confirms that ERI Distance Learning Center meets the criteria for pre-approved recertification credit(s) for any of HRCI’s eight credentials, including SPHR® and PHR®.

  • CCP/CBP/GRP/WLCP Credit Information:

    This online course qualifies for recertification credit for the Certified Compensation Professional (CCP®), Certified Benefits Professional® (CBP), Global Remuneration Professional (GRP®), and Work-Life Certified Professional (WLCP®) designations granted by WorldatWork Society of Certified Professionals. For more information on recertification, visit the Society website at www.worldatworksociety.org.

  • CPE QAS Self Study Credit Information:

    National Registry QAS Self Study - Course approved for 2.5 credit(s) in these states:

    Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virgin Islands, Virginia, Washington, West Virginia, Wyoming

    Course approved for 2 credit(s) in Vermont

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Additional Information:
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The ERI Distance Learning Center is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: https://www.nasbaregistry.org/

ERI Economic Research Institute is recognized by SHRM to offer Professional Development Credits (PDCs) for the SHRM-CP® or SHRM-SCP®