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Every formula is grouped by official syllabus topic, with the formula in math notation plus a one-line note on when to use it (or a watch-out from CAIA, CFA, or other prep-provider commentary). Coverage is calibrated to the 2026 syllabus and refreshed when the corpus changes.

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Free IRS Enrolled Agent SEE Part 2 (Businesses) Formula and Limits Sheet (2026)

Every EA Part 2 formula you need on the test, grouped by topic, rendered with full math notation. 52 formulas across 3 topics, calibrated to the 2026 syllabus. Free forever, no signup required.

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3 Topics

2026 Syllabus

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All EA Part 2 Formulas

Business Entities and Considerations 12 items

Section 752 net deemed distribution on contribution of encumbered property

\text{Net} = \text{Debt assumed by partnership} - \text{Contributor's new share of that debt}

— gain recognized only if Net exceeds contributor's outside basis (§731(a))

Section 751 hot-asset ordinary income on sale of a partnership interest

\text{Ordinary} = \text{Share of unrealized receivables} + \text{Share of inventory items}

— remainder of total gain is capital under §741

Section 6698 partnership late-filing penalty

P = \$245 \times N \times M

— N = number of partners, M = months late (max 12); 2025 amount; Rev. Proc. 84-35 relief for ≤10-partner partnerships

Amount realized on sale of a partnership interest (§741)

AR = C + DR - B

— AR = amount realized (gain), C = cash received, DR = partner's share of debt relieved, B = outside basis

Partner's outside basis in a partnership

B = \text{Cash} + \text{AB}_{prop} + \text{Debt share} + \text{Income} - \text{Distributions} - \text{Losses}

— AB = adjusted basis of contributed property; basis cannot go below zero (§§722, 705, 752)

S corporation shareholder loss deduction limit

L_{max} = B_{stock} + B_{debt}

— 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

G_{357(c)} = \max(0,\; L - B)

— L = liabilities assumed by corporation, B = total adjusted basis of property transferred

Accumulated earnings tax

\text{AET} = 0.20 \times (\text{ATI} - C)

— ATI = accumulated taxable income, C = $250,000 credit ($150,000 for personal service corporations)

C corporation charitable contribution deduction limit

D_{char} \le 0.10 \times TI_{pre}

— TI_pre = taxable income before charitable deduction, DRD, NOL carryback, and capital-loss carryback; 5-year carryforward of excess

Shareholder stock basis in a Section 351 exchange

B_s = B_p + G_r - \text{Boot} - L_a

— B_p = basis of property transferred, G_r = gain recognized, Boot = cash/other property received, L_a = liabilities assumed by corporation

Gain recognized on boot in a Section 351 exchange

G = \min(\text{Boot},\ G_{realized})

— Boot = cash plus FMV of non-stock property received, G_realized = FMV received minus basis of property transferred; loss never recognized

Corporation's carryover basis in property received under §351

B_c = B_s + G_r

— B_c = corporation's basis, B_s = shareholder's adjusted basis in property, G_r = gain recognized by the shareholder

Business Tax Preparation 12 items

Section 163(j) business interest expense limitation

Cap = BII + 0.30 \times ATI + FPI

— BII = business interest income, ATI = adjusted taxable income, FPI = floor-plan financing interest

Section 195 first-year start-up cost deduction

Yr1 = \max(0,\ \$5{,}000 - \max(0, S - \$50{,}000))

— S = total start-up costs; remainder amortized straight-line over 180 months from start

Cost of goods sold

COGS = BI + P + L + O - EI

— BI = beginning inventory, P = purchases, L = direct labor, O = other production costs, EI = ending inventory

Insolvency amount for §108 COD exclusion

Insolvency = L - A

— L = total liabilities immediately before discharge, A = FMV of total assets immediately before discharge; exclusion capped at this amount

Section 199A W-2 wage and UBIA limit above threshold

Limit = \max(0.50 \times W2,\ 0.25 \times W2 + 0.025 \times UBIA)

— W2 = W-2 wages paid, UBIA = unadjusted basis immediately after acquisition of qualified property

Section 199A qualified business income deduction

QBI\ ded = \min(0.20 \times QBI,\ 0.20 \times (TI - NCG))

— QBI = qualified business income, TI = taxable income, NCG = net capital gains

Depreciable basis on personal-to-business conversion

B = \min(AB, FMV)

— AB = adjusted basis at conversion, FMV = fair market value at date of conversion

Small taxpayer safe harbor building expense cap

Cap = \min(0.02 \times UB,\ \$10{,}000)

— UB = unadjusted basis of the building (§1.263(a)-3(h))

Section 7872 imputed interest on a below-market loan

I = AFR \times P

— AFR = applicable federal rate, P = loan principal outstanding

Realized gain or loss on property disposition

\text{Gain/Loss} = AR - AB

— AR = amount realized, AB = adjusted basis at sale

Adjusted basis of property

AB = CB + I - D

— CB = cost basis, I = capital improvements, D = depreciation taken or allowable (§1016)

Section 1245 ordinary depreciation recapture

\text{Recapture} = \min(\text{Gain}, \text{Depreciation taken})

— taxed as ordinary income; remaining gain is Section 1231

Specialized Returns and Taxpayers 8 items

Section 4975 first-tier excise tax on a prohibited transaction

\text{Tax} = 0.15 \times \text{Amount involved}

— assessed per year until corrected; rises to 100% if not corrected

Farm optional method self-employment earnings

\text{SE earnings} = \tfrac{2}{3} \times \text{Gross farm income}

— capped at $7,320 (2025); available when net farm earnings < $7,493

IRS method rental allocation for a mixed-use vacation home

\text{Rental \%} = \dfrac{\text{Rental days}}{\text{Rental days} + \text{Personal days}}

— fraction applied to all expenses to split rental vs personal

SEP-IRA contribution limit for a self-employed individual

C = \min(0.20 \times \text{NESE}_{\text{net}},\; 70{,}000)

— NESE_net = net SE earnings less the deductible half of SE tax (2025 cap)

Trust distribution deduction (sections 651 and 661)

\text{DD} = \min(\text{Distributions},\ \text{DNI} - \text{net tax-exempt income})

— DD = distribution deduction, DNI = distributable net income

Section 280A vacation home personal-use threshold

\text{Threshold} = \max(14,\; 0.10 \times R)

— R = rental days; exceeding the threshold makes the property a residence with deductions capped at rental income

Distributable net income for a trust

\text{DNI} = \text{TI} + \text{Exemption} + \text{Tax-exempt interest} - \text{Capital gains to corpus}

— TI = taxable income before distribution deduction

Section 469(i) rental loss allowance after MAGI phaseout

A = \max(0,\; 25{,}000 - 0.5 \times \max(0, \text{MAGI} - 100{,}000))

— A = allowed active-participation loss; fully phased out at $150,000 MAGI

EA Part 2 Limits and Thresholds

Business Entities and Considerations 8 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.

§6221(b) BBA opt-out requires ≤100 K-1s with all eligible partners; the §6226 push-out election must be made within 45 days of the FPA.

§183(d) safe harbor shifts the burden of proof to the IRS with profit in 3 of last 5 years (2 of 7 for horse breeding/racing).

The 20% accumulated earnings tax applies above a credit of $250,000 (or $150,000 for personal service corporations).

S corporations require ≤100 eligible shareholders, one class of stock, and a Form 2553 election by the 15th day of the 3rd month.

§1244 allows ordinary-loss treatment up to $50,000 ($100,000 MFJ) on the first $1 million of stock issued to original shareholders.

The dividends-received deduction is 50% for under 20% ownership, 65% for 20% to 80%, and 100% for affiliated 80%+ groups.

Business Tax Preparation 8 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.

For 2025, §179 expensing is capped at $1,250,000 with phase-out beginning at $3,130,000 of total purchases.

Bonus depreciation in 2025 is 40%, the standard mileage rate is 70¢ per business mile, and business meals are 50% deductible.

§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.

A net negative §481(a) adjustment is taken in 1 year (favorable) while a net positive is spread over 4 years (unfavorable).

For 2025 §280F passenger autos, year-1 depreciation is capped at $12,200 (or $20,200 with bonus depreciation).

Specialized Returns and Taxpayers 4 items

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.

2025 §401(k) elective deferral is $23,500 with $7,500 age-50 catch-up and $11,250 super catch-up for ages 60-63.

The §469(i) $25,000 active-participation rental allowance phases out $0.50 per dollar of MAGI between $100,000 and $150,000.

Free IRS Enrolled Agent SEE Part 2 (Businesses) Formula and Limits Sheet (2026)

All EA Part 2 Formulas

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