Free CPA REG (Taxation & Regulation) Formula and Limits Sheet (2026)
Every CPA REG formula you need on the test, grouped by topic, rendered with full math notation. 61 formulas across 5 topics, calibrated to the 2026 syllabus. Free forever, no signup required.
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All CPA REG Formulas
Ethics, Professional Responsibilities and Federal Tax Procedures
6 items
Estimated tax safe harbor (underpayment penalty avoidance)
No penalty if tax paid via withholding + estimated payments the lesser of:
90% of current year tax, OR
100% of prior year tax (110% if prior year AGI > $150,000).
Payments due: April 15, June 15, Sept 15, Jan 15.
Taxpayer accuracy-related penalty
§6662: 1) 20% of underpayment for negligence, substantial understatement, or substantial valuation misstatement. 2) 40% for gross valuation misstatement. Substantial understatement = greater of 10% of tax or $5,000 (ind) / $10,000 (corp). Reasonable cause + good faith exception.
Statute of limitations on tax assessment
Assessment SOL: 1) 3 yrs from later of due date or filing date 2) 6 yrs if gross income understatement > 25% 3) Unlimited if fraud or no return filed. Refund claim: later of 3 yrs from filing or 2 yrs from payment.
Trust fund recovery penalty (TFRP, §6672)
. Applies to responsible persons (officers, directors, bookkeepers w/ disbursement authority) who willfully fail to collect/remit. Excludes employer FICA share.
Tax preparer Circular 230 + §6694 penalties
§6694(a) unreasonable position: max($1,000, 50% of fee). §6694(b) willful/reckless: max($5,000, 75% of fee). Circular 230: reasonable reliance on client facts; must investigate red flags / inconsistencies.
AICPA Statements on Standards for Tax Services (SSTSs)
SSTS 1: realistic possibility of success (else disclose). 2: reasonable effort on questions. 3: may rely on client info, inquire if suspect. 4: estimates OK if reasonable. 5: depart from prior treatment if justified. 6: advise on errors. 7: clear tax advice.
Business Law
8 items
Bankruptcy — Chapter 7 vs 11 vs 13
Ch 7: liquidation — trustee sells non-exempt assets, unsecured debts discharged. Ch 11: reorganization — debtor-in-possession, court-approved plan. Ch 13: wage-earner repayment — debt limits apply, 3-5 yr plan from disposable income.
Contract formation — essential elements
Six elements: 1) Offer 2) Acceptance 3) Consideration 4) Capacity 5) Legality 6) Mutual assent. Common law: mirror-image rule (acceptance must match offer exactly). UCC §2-207: relaxed for sale of goods — additional terms may bind.
Negotiable instruments — HDC requirements
HDC = holder who takes: 1) for value, 2) in good faith, 3) without notice of defects/dishonor/claims. Takes free of personal defenses (lack of consideration, fraud in inducement); subject to real defenses (fraud in factum, infancy, illegality, duress, bankruptcy discharge).
UCC Article 9 — secured transactions: attachment + perfection
Attachment (3): 1) value given, 2) debtor has rights in collateral, 3) authenticated security agreement. Perfection (priority): file UCC-1, possession, control (deposit accts), or automatic (PMSI in consumer goods).
Federal employment law thresholds
ADEA: 20+ EEs (protects 40+). ADA & Title VII: 15+ EEs. FMLA: 50+ EEs (12 wks unpaid). FLSA: min wage $7.25, OT 1.5× after 40 hrs. ERISA: pensions (no EE min).
Statute of Frauds — contracts requiring writing (MY LEGS)
MY LEGS: 1) Marriage consideration 2) Year — cannot be performed within 1 year 3) Land/real estate interests 4) Executor pays decedent's debts personally 5) Goods ≥ $500 (UCC §2-201) 6) Surety — promise to pay another's debt. Must be written and signed by party to be charged.
Agency — types of authority
Authority types: 1) Express — explicitly stated by principal. 2) Implied — incidental/customary to express. 3) Apparent — principal's conduct leads 3rd party to reasonably believe agent has authority. 4) Ratification — principal accepts unauthorized act after the fact.
Federal securities — Securities Act 1933 vs 1934
1933 Act (issuance): register new securities via S-1/prospectus. §11 = registration misstatements; §12 = unregistered sale or misleading prospectus. 1934 Act (trading): §10(b)/Rule 10b-5 fraud + insider trading; periodic 10-K, 10-Q, 8-K.
Federal Taxation of Property Transactions
13 items
§1231, §1245, and §1250 recapture
§1231: net gains → LTCG; net losses → ordinary.
§1245: all depreciation on personal property recaptured as ordinary.
§1250: only depreciation above SL on realty recaptured (25% rate for unrecaptured §1250 gain).
Like-kind exchange: gain recognized and new basis
Real property only post-TCJA (§1031).
Gift basis and inherited basis
Gift: donee takes donor's adjusted basis (carryover basis) + gift tax attributable to appreciation.
If FMV < donor's basis at gift date: basis for loss is FMV; basis for gain is donor's basis.
Inherited: basis = FMV at date of death (stepped-up or stepped-down).
Home sale exclusion §121
Exclude up to $250,000 ($500,000 MFJ) of gain on sale of principal residence.
Requirements: owned and used as principal residence 2 of last 5 years (ownership and use tests).
Cannot use exclusion more than once every 2 years.
§1231 lookback rule
Net §1231 gains treated as ordinary income (not capital gain) to the extent of unrecaptured net §1231 losses from the prior 5 years.
Lookback period: 5 years. Prevents taxpayers from converting ordinary losses into capital gains.
§179 expense election (2026)
— Qualifying = property placed in service; phase-out $-for-$ above $3.13M; limited to active business TI.
Gifted property basis — §1015 carryover with split rule
If FMV ≥ donor basis at gift: basis = donor basis (carryover); HP tacks. If FMV < donor basis: gain basis = donor basis, loss basis = FMV; sale between = no gain/loss; HP for loss basis starts at gift.
§121 home sale exclusion — partial-use rules
Partial . MaxExcl = $250K Single / $500K MFJ. Triggers: job change, health, unforeseen circumstances. Requires own+use ≥2 of last 5 yrs; no use within 2 yrs of prior §121.
§1031 like-kind exchange — post-TCJA (real property only)
Rules: 1) Real property only (held for trade/investment). 2) Personal property excluded post-TCJA. 3) Gain recognized = min(realized gain, boot received). 4) New basis = FMV new − deferred gain + deferred loss. 5) 45-day ID / 180-day close.
§1033 involuntary conversion
Recognized gain = min(realized gain, proceeds not reinvested). New basis = old basis + recognized gain (or = replacement cost - deferred gain). Reinvest within 2 yrs (3 yrs federal condemnation) in qualifying replacement property.
Bonus depreciation phase-down schedule
§168(k) post-TCJA: 2024=60%, 2025=40%, 2026=20%, 2027+=0%. Qualified property = new/used, recovery ≤20 yrs (incl. off-the-shelf software). Order: §179 first → bonus on remaining basis → MACRS on residual.
§168 MACRS depreciation periods
Class lives: 3-yr (tractors, racehorses); 5-yr (autos, computers, R&D equip); 7-yr (furniture, fixtures, ag machinery); 15-yr (qualified leasehold/restaurant); 27.5-yr (residential rental); 39-yr (nonresidential). Half-year default; mid-quarter if >40% personal property placed in Q4.
Inherited property basis — §1014 step-up
Basis = FMV at date of death (step-up OR step-down). Alternate valuation date = 6 months after death, elective only if it (1) lowers gross estate AND (2) lowers estate tax. Holding period = automatically long-term.
Federal Taxation of Individuals
15 items
Individual income tax formula
Gross Income
= Adjusted Gross Income (AGI)
= Taxable Income
= Tax Liability
2026 standard deductions
Single: $16,100
Married Filing Jointly (MFJ): $32,200
Head of Household (HoH): $24,150
Married Filing Separately (MFS): $16,100
Additional for age or blind: $1,650 (MFJ/MFS); $2,050 (Single/HoH).
Long-term capital gain rates (2026)
0% rate: taxable income (Single) / $98,900 (MFJ)
15% rate: up to $545,500 (Single) / $613,700 (MFJ)
20% rate: above thresholds.
NIIT (3.8%) added for high earners on net investment income.
AMT formula (individual) and exemptions (2026)
Regular TI + preferences/adjustments = AMTI
Exemption = AMT base
($244,500) or (above) = TMT
2026 exemptions: Single $90,100 (PO $500k); MFJ $140,200 (PO $1M). OBBBA flat thresholds.
Net investment income tax (NIIT)
Thresholds: Single $200,000; MFJ $250,000; MFS $125,000.
NII includes dividends, interest, rents, royalties, passive activity income, capital gains.
HSA contribution limits + qualifications
2026: $4,400 self-only / $8,750 family; +$1,000 catch-up if 55+. Must be in HDHP (min deductible $1,650 self / $3,300 family). Triple tax benefit: pre-tax in, tax-free growth, tax-free out for qualified medical.
Education credits — AOTC vs LLC
AOTC: max $2,500 = 100%×first $2,000 + 25%×next $2,000; 40% refundable; 4 yrs undergrad; phase-out $80–90K S / $160–180K MFJ. LLC: max $2,000 per RETURN = 20%×first $10,000; nonrefundable; unlimited yrs; same phase-out.
Child Tax Credit (CTC) and ODC (2026 OBBBA)
; refundable portion (ACTC) up to $1{,}700/child. ODC = $500 nonrefundable per other dependent (incl. children ≥17). Phaseout: −$50 per $1{,}000 (or fraction) of AGI over $400K MFJ / $200K others.
Itemized deductions — Schedule A categories (post-OBBBA)
Schedule A: 1) Medical >7.5% AGI floor; 2) SALT cap $40K MFJ (OBBBA); 3) Mortgage int — acq debt ≤$750K (post-2017), ≤$1M grandfathered; 4) Charitable — 60% AGI cash/public, 30% private, 30% LTCG property; 5) Investment int ≤ net inv income.
Kiddie tax (post-TCJA, 2026)
Child <19 (<24 if FT student) unearned income: first $1,400 tax-free, next $1,400 at child rate, excess at PARENT'S marginal rate. Form 8615; election Form 8814 if unearned <$13,000.
Net Investment Income Tax (NIIT) — 3.8%
— NII = investment income (int/div/cap gains/rents/royalties) less allocable deductions; Threshold = $200K Single / $250K MFJ / $125K MFS; not indexed.
Retirement contribution limits (2026)
401(k): $24,500 + $8,000 catch-up (50+). 415(c) total: $72,000 ($80,000 w/ catch-up). IRA: $7,500 + $1,100 catch-up. Roth phase-out: $150K–$165K Single, $236K–$246K MFJ.
Above-the-line deductions (adjustments to income)
Gross Income − Adjustments = AGI. Common: educator exp ($300), HSA, ½ SE tax, SE retirement, SE health ins, student loan int ($2,500 cap, AGI phase-out), pre-2019 alimony. Std/itemized are BELOW-the-line.
Standard deduction (2026 OBBBA values)
Base SD: Single $16,100 / MFJ $32,200 / HoH $24,150. Add'l (65+ or blind): $1,650 single/HoH, $1,300 MFJ each. Dependent SD: greater of $1,350 or earned income + $450, capped at regular SD.
AGI vs Taxable Income computation flow
; ; — GI=gross income, AdjAL=above-the-line adjustments, SD=standard ded, ID=itemized, QBI=§199A. AGI gates medical/charitable limits.
Federal Taxation of Entities
13 items
Qualified business income (QBI) deduction §199A
High earners capped at or . SSTBs lose deduction above thresholds.
Partnership: outside basis calculation
Cannot go below zero.
S-corporation shareholder basis
Beginning Basis
+ Separately/non-separately stated income
Distributions (tax-free up to basis)
Losses/deductions (limited to basis)
Basis 0; excess losses suspended.
Corporate tax rate and dividends-received deduction (DRD)
Flat 21% corporate income tax rate (TCJA, permanent post-OBBBA).
DRD: 50% if < 20% ownership; 65% if 20% but < 80%; 100% if 80% (affiliated group).
DRD limited to applicable % of taxable income (before DRD) unless creates/increases NOL.
Self-employment tax
(12.4% Social Security on earnings + 2.9% Medicare on all earnings + 0.9% Additional Medicare on earnings > $200k/$250k)
Deduct 50% of SE tax as above-the-line adjustment.
§721 partnership formation — no gain recognition
§721: NO gain/loss to partnership or partners on property contribution for partnership interest. No control test (unlike §351). ; .
Partnership distributions — current vs liquidating
Current: nontaxable up to outside basis; cash > basis = capital gain; property takes carryover basis (≤ remaining basis). Liquidating: allocate basis (cash → ordinary → capital); leftover basis = loss (if cash/ordinary only) else absorbed into property.
Accumulated Earnings Tax (AET, §531)
AET = 20% × Accumulated Taxable Income (ATI). ATI = Taxable Income − Federal Tax − Dividends Paid − Accumulated Earnings Credit. Credit: $250K lifetime ($150K personal service corp). C-corps only; IRS bears burden of proof.
Corporate Alternative Minimum Tax (CAMT, post-IRA 2022)
. Applies if avg AFSI > $1B over prior 3 yrs. Tax = greater of regular tax or CAMT. Effective for tax yrs beginning after 12/31/2022.
Personal Holding Company (PHC) tax (§541)
. Two tests (both required): 1) Stock — 5 or fewer own >50% in last half of year. 2) Income — PHC income (div/int/rents/royalties) ≥60% of AOGI. Avoid: distribute or fail a test.
§351 corporate formation — control test + boot
1) No gain if property transferors own ≥80% voting + ≥80% each other class after exchange (services don't count). 2) Gain recognized = min(Realized gain, Boot FMV). 3) Shareholder stock basis = Adj basis transferred − Boot + Gain recognized. 4) Corp basis = Transferor basis + Gain recognized.
S-corp distributions — AAA + AEP rules
No AEP: distrib reduces basis; excess = cap gain. With AEP tiers: 1) AAA tax-free to basis 2) AEP = dividend 3) remaining AAA tax-free to basis 4) basis recovery 5) cap gain. AAA tracked at corp level.
Schedule M-1 / M-3 reconciliation
Taxable Income = Book NI + Fed tax expense + Book>Tax depreciation + 50% meals/entertainment + Key-person life premiums + Fines/penalties − Tax-exempt interest − Life insurance proceeds − Tax>Book depreciation − DRD. M-3 required if assets ≥ $10M.
CPA REG Limits and Thresholds
Federal Taxation of Entities
6 items
Post-OBBBA, the SALT itemized deduction cap is $40,000 for MFJ, phasing down above $500,000 MAGI.
For tax year 2026, the standard deduction is $32,200 MFJ, $24,150 HOH, and $16,100 single.
The Child Tax Credit is $2,200 per qualifying child, with $1,700 refundable as the ACTC.
The 2026 unified lifetime estate and gift exemption is $15M per individual, with a top rate of 40%.
The 2026 401(k) elective deferral limit is $24,500; total §415(c) additions are capped at $72,000.
A Qualified Charitable Distribution from an IRA is capped at $111,000 per year once the owner is at least age 70½.