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All EA Part 2 Formulas
Business Entities and Considerations
21 items
Section 752 net deemed distribution on contribution of encumbered property
— gain recognized only if Net exceeds contributor's outside basis (§731(a))
Section 751 hot-asset ordinary income on sale of a partnership interest
— remainder of total gain is capital under §741
Section 6698 partnership late-filing penalty
— N = number of partners, M = months late (max 12); 2025 amount; Rev. Proc. 84-35 relief for ≤10-partner partnerships
S corporation shareholder loss deduction limit
— B_stock = adjusted stock basis after distributions and nondeductibles, B_debt = basis in direct shareholder loans; excess suspends and carries forward
Section 357(c) recognized gain on liability excess
— L = liabilities assumed by corporation, B = total adjusted basis of property transferred
Gain recognized on a current cash distribution from a partnership
— Cash = money distributed, Basis_out = partner's outside basis immediately before the distribution
Section 743(b) inside basis adjustment for a buyer of a partnership interest
— B_outside,buyer = buyer's cost basis in the interest, S_inside = buyer's share of partnership inside basis
Section 704(d) deductible partnership loss limit
— L_alloc = partner's allocated loss for the year, B_outside = outside basis before the loss
Successor partner's stepped-up outside basis on death of a partner
— FMV_interest = fair market value of interest at date of death, L_share = decedent's share of partnership liabilities
Section 6221(b) eligible-partner count for BBA opt-out
— each S-corp shareholder counted individually; trusts (other than decedent estates) and partnership-partners disqualify
BBA imputed underpayment at the highest applicable rate
— A = net partnership adjustment for the reviewed year, r_max = highest applicable rate (currently 37%)
Partnership inside basis in property contributed under section 721
— B_partner^adj = contributing partner's adjusted basis in the property immediately before contribution (transferred basis)
Section 362(e)(2) anti-loss-duplication corporate basis stepdown
when — applies to net built-in loss contributions; elective alternative is to reduce transferor's stock basis instead
Brother-sister controlled group test under §1563(a)
voting power or value held by 5 or fewer individuals AND identical ownership across corporations — §1563(e) attribution does not reach between siblings
Service provider's compensation income on stock for services under §351(d)(1)
— ordinary income to recipient; service shares excluded from 80% control test; stock basis = FMV included in income
Required annual payment for corporate estimated tax
; large corps (TI $1M in any of 3 prior yrs) lose prior-year safe harbor after 1st installment
C corp failure-to-file penalty on Form 1120
; if >60 days late, minimum — T = unpaid tax, m = months (or part months) late
Dividends-received deduction (DRD)
, capped at (cap waived if full DRD creates/increases NOL) — p = 50/65/100% by ownership, D = dividends received, TI = taxable income pre-DRD
S corporation year-end shareholder stock basis under §1367
— SB_0 = beginning basis, C = contributions, I = income, TEI = tax-exempt income, D = distributions, NDE = nondeductibles, L = losses
S corporation per-share per-day income allocation under §1377(a)
— S_i = shareholder's allocation, d_i = share-days held by shareholder, D_total = total share-days in year, Item = pass-through item
Passive investment income termination test under §1362(d)(3)
Terminates if for 3 consecutive years with AE&P present — PII = passive investment income, GR = gross receipts
Business Tax Preparation
24 items
Section 163(j) business interest expense limitation
— BII = business interest income, ATI = adjusted taxable income, FPI = floor-plan financing interest
Section 195 first-year start-up cost deduction
— S = total start-up costs; remainder amortized straight-line over 180 months from start
Gross profit on Schedule C
— NR = net receipts (gross receipts less returns and allowances), COGS = cost of goods sold
Combined FICA exposure on recharacterized S corp wages
— recharacterized wages bear both employer and employee shares (12.4% SS + 2.9% Medicare)
Depreciable basis on personal-to-business conversion
— AB = adjusted basis at conversion, FMV = fair market value at date of conversion
Small taxpayer safe harbor building expense cap
— UB = unadjusted basis of the building (§1.263(a)-3(h))
Bonus depreciation deduction under section 168(k) for 2025
— applies to property with recovery period ≤20 years; 40% rate phasing down
Cost depletion deduction for natural resources
— Basis = adjusted property basis; deduction cannot reduce basis below zero
Percentage depletion deduction with taxable income cap
— r = statutory rate (15% oil/gas, 22% sulfur, 5% gravel), TI = property taxable income (100% cap oil/gas)
Heavy SUV first-year cost recovery
— B = business-use basis, S = §179 (cap $31,300), b = bonus rate (0.40 for 2025)
Standard mileage deduction for business vehicle use
— M_b = business miles, r = IRS standard rate ($0.70/mile for 2025)
Currently deductible business interest after 263A capitalization
— I_total = interest paid or accrued, I_cp = construction-period interest capitalized to property basis under §263A
Section 1033 gain recognized on a condemnation reinvestment
. Proceeds = condemnation award net of selling expenses; replacement basis = cost minus deferred gain
Section 382 annual NOL limit after an ownership change
. Triggered by a >50 percentage-point ownership shift over a 3-year testing period
Simplified method home office deduction
, maximum $1,500. No depreciation allowed, no carryover of disallowed amounts
Section 1031 recognized gain on boot received
— G_rec = recognized gain, G_real = realized gain, B_r = boot received (cash + net debt relief + non-real-property)
Installment sale gross profit ratio under section 453
— GPR = gross profit ratio, GP = gross profit (selling price − adjusted basis − selling expenses), CP = contract price (total non-debt payments)
Section 1031 basis in replacement property
— B_new = replacement basis, B_old = relinquished adjusted basis, B_p = boot paid, G_rec = gain recognized, B_r = boot received
Schedule M-2 retained earnings rollforward for a C corporation
— RE = retained earnings, NI_books = book net income per Schedule M-1 line 1
Schedule M-1 book to taxable income reconciliation
— TI = taxable income before NOL and special deductions, Perm = permanent add-backs
Section 481(a) positive adjustment annual income inclusion
— positive adjustments spread one-quarter per year over 4 years starting with the year of change
Applicable large employer full-time equivalent count
— FT = employees averaging 30+ hrs/wk, PT_hours = total monthly part-time hours; ALE if FTE ≥ 50
Section 3509 reduced-rate worker misclassification penalty
— W = wages paid on 1099; rates double to 3% and 40% if 1099 was not filed
Section 4980H(a) sledgehammer ACA penalty
— 2025 rate, assessed monthly at 1/12; triggered when ALE fails to offer MEC to ≥95% of FT employees and one FT gets PTC
Specialized Returns and Taxpayers
12 items
Net tax-exempt interest input to trust DNI under section 643
— TEI = tax-exempt interest; allocable expenses determined via the §265 ratio
Section 4975 first-tier excise tax on a prohibited transaction
— assessed per year until corrected; rises to 100% if not corrected
Farm optional method self-employment earnings
— capped at $7,320 (2025); available when net farm earnings < $7,493
Unrelated business taxable income under section 512
— Gross UBI = unrelated gross income; $1,000 = specific deduction (aggregate, not per silo)
Tax on UBTI for an exempt corporation
— UBTI = unrelated business taxable income; 0.21 = flat corporate rate (exempt trusts instead use trust rates)
Section 509(a)(1) public support fraction
— measured over 5-year computation period; 10% qualifies with facts-and-circumstances
Safe harbor 401(k) basic matching contribution
— M = employer match % of comp; d = employee deferral % of comp
ADP test maximum HCE average deferral rate
— N = non-HCE ADP %; HCE = highly compensated employee under §414(q)
Self-employed retirement plan effective contribution rate
— r = stated plan rate (e.g., 0.25 for SEP); r_e = effective rate applied to 0.9235-adjusted net SE earnings (0.25/1.25 = 0.20)
Section 6654(i) qualified farmer required annual payment
— single estimate due Jan 15, OR file and pay by March 1
Section 175 soil and water conservation expense deduction limit
— excess carries forward without limit; approved NRCS or state plan required
Schedule J farm income averaging tax under section 1301
— TI = current taxable income, EFI = elected farm income, TI_i = prior base-year i TI
EA Part 2 Limits and Thresholds
Business Entities and Considerations
21 items
Form 990 is required at gross receipts ≥$200,000 or assets ≥$500,000; the 990-N e-postcard applies when receipts are ≤$50,000.
The §6698 late-filing penalty for Form 1065 is $245 per partner per month, capped at 12 months.
Form 1099-NEC reports nonemployee compensation at $600 or more and is due to both recipient and IRS by January 31.
The 20% accumulated earnings tax applies above a credit of $250,000 (or $150,000 for personal service corporations).
SE tax on a general partner's distributive share is 15.3% up to $176,100 (2025) and 2.9% Medicare thereafter.
S corporations require ≤100 eligible shareholders, one class of stock, and a Form 2553 election by the 15th day of the 3rd month.
§707(b) disallows losses on sales between a partnership and a partner owning more than 50% of capital or profits.
The 120% substantially appreciated inventory test applies only to §751(b) disproportionate distributions, not §751(a) sales of an interest.
Under §707(a)(2)(B), a contribution followed by a related distribution within 2 years may be recharacterized as a disguised sale.
Form 1065 may be extended via Form 7004 for six months to September 15 for a calendar-year partnership.
§6226 push-out underpayment interest accrues at the federal short-term rate plus 5 percentage points, two points above the standard rate.
Rev. Proc. 84-35 relief from the §6698 penalty applies to partnerships with 10 or fewer partners who are all natural persons or estates.
A PHC under §542 requires 5 or fewer individuals own >50% of stock with 60% PHC income, taxed at 20% under §541.
§357(c) recognizes gain equal to the excess of liabilities assumed over adjusted basis of property transferred, computed per transferor.
§351 control requires the transferor group own at least 80% of voting power and 80% of each class of nonvoting stock immediately after.
CAMT is a 15% tax on AFSI for corps averaging over $1 billion AFSI in 3 prior years (or $100 million for US subs of foreign-parented groups).
A §303 redemption qualifies for sale treatment if the decedent's stock value exceeds 35% of the adjusted gross estate.
Under §302(b)(2), a redemption is substantially disproportionate if after redemption the shareholder owns less than 50% voting power and less than 80% of pre-redemption ownership.
Passive investment income terminates an S election when a former C corp with AE&P earns PII exceeding 25% of gross receipts for 3 consecutive tax years.
Rev. Proc. 2013-30 grants late S election relief if Form 2553 is filed within 3 years and 75 days of the intended effective date with reasonable cause.
Voluntary S election revocation requires consent from shareholders owning more than 50% of shares, and a 5-year wait applies before re-electing.
Business Tax Preparation
24 items
Business gifts are capped at $25 per recipient per year, and the simplified home office method maxes at $1,500 (300 sq ft × $5).
The §199A QBI deduction is 20% of QBI with 2025 thresholds of $241,950 single and $483,900 MFJ.
At-risk §465 includes cash, adjusted basis of property, recourse debt, and qualified nonrecourse real estate financing, reported on Form 6198.
§1031 like-kind exchanges require identification within 45 days and closing within 180 days, reported on Form 8824.
The de minimis safe harbor allows expensing up to $2,500 per item without an AFS or $5,000 per item with an AFS.
Accountable plans require substantiation within 60 days and return of excess within 120 days.
The §179 cap for SUVs between 6,000 and 14,000 lbs GVWR is $31,300 per vehicle for 2025.
Acquired §197 intangibles like goodwill and customer lists amortize straight-line over 15 years regardless of useful life.
The small taxpayer safe harbor expenses building outlays if UB ≤$1M and outlays ≤ lesser of $10,000 or 2% of UB.
Business meals are deductible at 50% in 2025; the temporary 100% restaurant rule under §274(n)(2)(D) expired 12/31/2022.
Employer-paid group-term life insurance premiums are deductible by the business on up to $50,000 of face coverage per employee under §79.
An S-corp shareholder owning more than 2% qualifies for the §162(l) SEHI deduction only if premiums are included in W-2 box 1 wages.
Under §1033, condemnation gain is deferred by reinvesting within 2 years generally, 3 years for business real property, or 4 years for a principal residence in a disaster area.
The §44 Disabled Access Credit is 50% of eligible expenses between $250 and $10,250, capped at a $5,000 credit on Form 8826.
The §38 general business credit carries back 1 year and forward 20 years, aggregated on Form 3800.
§1031 identification rules: any 3 properties regardless of value, 200% of relinquished FMV, or 95% of identified FMV acquired.
The §1231 lookback recharacterizes net §1231 gain as ordinary up to net §1231 losses from the 5 prior tax years.
The §1014 alternate valuation date is 6 months after death, elected on Form 706 only if it lowers both gross estate and estate tax.
C corporation charitable contributions are limited to 10% of taxable income computed before the contribution deduction, DRD, and NOL carrybacks.
§7872 below-market loan rules don't apply when aggregate loans between the parties never exceed $10,000 and aren't used to buy income-producing property.
Form 1125-E officer compensation detail is required when total receipts reach $500,000, and §291 adds back an extra 20% of §1250 recapture for C corporations.
ACA coverage is affordable in 2025 if the employee's self-only contribution does not exceed 9.02% of household income.
Form 8300 reports cash receipts over $10,000, filed within 15 days, with a written statement to the payor by January 31.
Under §3509 for unintentional misclassification with 1099s filed, the employer owes 1.5% of wages plus 20% of the employee FICA share.
Specialized Returns and Taxpayers
12 items
The qualified disability trust personal exemption is $5,050 for 2025, indexed annually.
Trusts hit the 37% bracket at $15,650 (2025); the personal exemption is $300 simple, $100 complex, $600 estate.
Real estate professional status requires more than 750 hours and more than 50% of personal services in real property trades.
Form 990 is due the 15th day of the 5th month after year-end, and 3 consecutive years of non-filing triggers automatic revocation under §6033(j).
Gross UBI of $1,000 or more triggers Form 990-T, which allows a $1,000 specific deduction and is taxed at 21% for exempt corporations.
A §501(c)(3) that files Form 1023 within 27 months of formation receives exemption retroactive to the formation date.
A §4975 prohibited transaction carries a 15% initial excise on the amount involved and 100% if not corrected by the IRS notice-of-deficiency date.
A SIMPLE IRA distribution within the first 2 years of participation triggers a 25% §72(t)(6) additional tax instead of the usual 10%.
The 2025 SIMPLE IRA elective deferral cap is $16,500 with an age-50 catch-up of $3,500 and a SECURE 2.0 ages 60-63 super catch-up of $5,250.
A §6654(i) qualified farmer needs 2/3 of gross income from farming; safe harbor is one estimate by January 15 or filing and paying by March 1.
§280A treats a dwelling as a residence (capping rental deductions at income) when personal use exceeds the greater of 14 days or 10% of rental days.
§1033(e) defers gain on excess drought sales of breeding, draft, or dairy livestock if proceeds are reinvested within 4 years after the close of the first gain year.
