Accumulated Earnings and Deferred Compensation

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Course Contents

Introduction
- page 1
Accumulated Earnings
- page 2
- Advantages of Retained Earnings
  - page 2
- Tax Treatment
  - page 3
- Accumulated Earnings Tax
  - page 3
  - Calculation of the penalty tax
    - page 4
  - Reasonable business needs
    - page 5
  - Working capital needs
    - page 6
- Bardahl Formula
  - page 6
  - Application problems
    - page 7
- Non-Inventory Situations
  - page 8
- Personal Holding Company Tax
  - page 9
  - Stock ownership test
    - page 9
  - Gross income test
    - page 9
  - Tax computation
    - page 10
- Comparing the AET and PHC Taxes
  - page 11
Deferred Compensation
- page 12
- Qualified Plans
  - page 12
- Nonqualified Plans
  - page 13
  - Disadvantages
    - page 13
  - Design of nonqualified plans
    - page 14
    - Constructive receipt
      - page 14
    - Economic benefit doctrine
      - page 15
    - Risk of forfeiture
      - page 15
- Types of Nonqualified Plans
  - page 16
  - Excess benefit plan
    - page 16
    - Top hat plans
      - page 16
  - Deferred Bonuses
    - page 16
  - Vested Trusts
    - page 17
    - Rabbi trusts
      - page 17
    - Secular trusts
      - page 18
  - Stock Options
    - page 19
  - Alternatives to stock options
    - page 20
    - Phantom stock
      - page 20
    - Stock appreciation rights
      - page 20
    - Restricted stock
      - page 20
  - Golden parachutes
    - page 21
Summary
- page 22