Free CPA TCP (Tax Compliance & Planning) Formula Sheet (2026)
Every CPA TCP formula you need on the test, grouped by topic, rendered with full math notation. 49 formulas across 4 topics, calibrated to the 2026 syllabus. Free forever, no signup required.
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All CPA TCP Formulas
Tax Compliance and Planning for Individuals
14 items
Individual AMT formula (TCP emphasis)
TI + Preferences + Adjustments = AMTI
Exemption = AMT Base
($220,700) or = TMT
At-risk basis (§465)
At-risk = cash + property basis + recourse debt.
Losses deductible only to extent of at-risk basis; excess suspended.
Non-recourse debt does NOT increase at-risk (except qualified non-recourse RE).
Passive activity loss (PAL) rules
Passive losses offset only passive income; suspended losses carry forward.
Full disposition releases all suspended losses.
Active rental: $25k (PO $100k–$150k AGI).
Material participation: 500+ hrs.
Estimated tax penalty safe harbor (TCP)
Tax paid lesser of:
90% current year, OR
100% prior year (110% if prior AGI > $150k).
Corps: 100% prior or 100% current (no 110%).
Self-employment (SE) tax calculation
up to SS base + excess.
+0.9% Add'l Medicare on > $200k ($250k MFJ). Deduct 50% above-the-line.
Investment interest expense limit
; NetInvInc = taxable interest + nonqual div + ST gains − inv expenses. LTCG/qual div excluded unless elected as ordinary (forfeits preferential rate). Excess carries forward indefinitely.
Self-employment tax components (2025)
Net SE = SE earnings × 92.35%. SS: 12.4% × min(Net SE, $176,100). Medicare: 2.9% × Net SE + 0.9% × (Net SE > $200K S / $250K MFJ). Deduct ½ SS+Medicare (not Add'l) above-the-line.
Filing status determination
1) Single: unmarried 12/31. 2) MFJ: married + joint election. 3) MFS: married + separate. 4) HoH: unmarried + paid >50% household + qualifying person >½ yr. 5) QSS: widow(er) w/ dep child, 2 yrs post-death, uses MFJ brackets.
Schedule A medical/dental floor
— QualMed = unreimbursed medical/dental + Rx + age-capped LTC premiums + most health insurance (excl. cosmetic); HSA/Roth-funded expenses excluded. 7.5% floor is permanent.
Charitable contribution AGI limits
Individual ceilings: 1) Cash to public charity: 60% AGI 2) Cash to private non-op foundation: 30% AGI 3) LTCG property to public (FMV): 30% AGI 4) LTCG to private foundation (FMV): 20% AGI 5) Ordinary/non-LTCG (basis): 50% AGI. 5-yr carryover. C-corp: 10% TI.
§199A QBI deduction — phase-in mechanics
. 2025 thresholds: $197,300 S / $394,600 MFJ; full phase-in over $50K S / $100K MFJ. SSTBs fully phased out above upper; non-SSTB then limited to greater of 50% W-2 or 25% W-2 + 2.5% UBIA.
Retirement contribution limits (2025 — TCP focus)
401(k): $23,500 + $7,500 catch-up (50+); 415(c) total cap $70,000. IRA (Trad/Roth): $7,000 + $1,000 catch-up. SIMPLE: $16,500 + $3,500 catch-up. SEP: min(25% comp, $70,000). QCD (IRA, age 70½+): up to $108,000.
Dependency tests — qualifying child (CARES) vs qualifying relative (SUPORT)
QC = CARES: Citizen (US/Can/Mex), Age (<19, <24 student, any if disabled), Relationship (descendant/sibling), Economic (didn't self-support >½), Same home >½ yr. QR = SUPORT: Support >50%, Under $5,200 GI (2025), Precluded as QC, Only US/Can/Mex, Relationship OR Resident, Taxpayer not MFJ.
Foreign Earned Income Exclusion (FEIE, §911)
Exclude up to $130,000 (2025) foreign earned income if: (a) bona fide resident full tax year, OR (b) physically present 330 full days in any 12-mo period. Tax home must be foreign. No FTC on excluded amount. Housing exclusion/deduction also available.
Entity Tax Compliance
19 items
Partnership inside vs. outside basis
Outside: partner's basis in interest.
Inside: partnership's basis in its assets.
Contribution: outside = contributor's carryover basis; inside = same.
§754 election: allows inside step-up on transfer/death.
S-corporation accumulated adjustments account (AAA)
AAA: cumulative post-S-election income (net of losses).
Distributions ordering:
1. AAA → tax-free (basis reduction)
2. AEP → taxable dividend
3. Remaining basis → return of basis
4. Excess → capital gain
C-corporation earnings and profits (E&P)
E&P = economic dividend capacity. Start with TI:
+ Tax-exempt income
+ Depr. difference (E&P uses ADS)
Federal taxes, non-deductible expenses.
Distributions reduce E&P; excess → basis → capital gain.
Built-in gains (BIG) tax for S-corp conversion
Applies to C→S conversion selling appreciated assets within 5-yr recognition period.
Net BIG = FMV at conversion basis at conversion.
CFC Subpart F income
CFC: U.S. shareholders own > 50% voting/value.
Subpart F income taxed currently (no distribution needed) to 10% U.S. shareholders on passive/tax-haven income.
GILTI: 10.5% min tax on intangible low-taxed income.
Partnership liquidating distribution
Allocate outside basis: 1) Cash first 2) Ordinary property (inventory, unrealized rec.) at carryover 3) Other property absorbs remainder. , recognized ONLY if cash + ordinary only. Holding period tacks.
§721 — partnership formation
§721: No gain/loss on contribution of property for partnership interest (no control test). 1) Outside basis = transferor's adjusted basis + share of partnership liabilities. 2) Inside basis = transferor's adjusted basis. 3) Disguised sale if cash returned within 2 years.
§1244 small business stock loss
Ordinary loss cap: ; excess = capital loss ($3K/yr limit). Eligibility: original-issue C-corp stock for cash/property (not services); corp ≤$1M contributed capital at issuance; 5-yr active-business test.
Net unrealized built-in gain (NUBIG) — S-corp
at S-election date. BIG tax = 21% × lesser of (a) recognized BIG in 5-yr recognition period, or (b) taxable income as C-corp. AB = adjusted basis; FMV measured at conversion.
S-corp distribution with AEP — AAA + AEP layering
Order: 1) AAA tax-free to basis 2) AEP as dividend 3) remaining AAA tax-free to basis 4) basis recovery 5) capital gain. AAA tracked at corp level. Bypass election: distribute AEP first.
S-corp distribution flowchart (no AEP)
No prior C-corp E&P: 1) Tax-free to extent of stock basis (reduces basis) 2) Excess over basis = capital gain 3) Basis floor = $0 (no negative). AAA tracked but not needed for ordering when AEP = $0.
§351 — control test + boot recognition
§351: 1) Transferors of property (not services) own ≥80% voting + ≥80% other classes post-transfer → no gain. 2) Stock basis = carryover. 3) Boot received: . 4) Liabilities assumed = boot only if tax-avoidance or liab > basis.
§163(j) business interest expense limit
. Excess carries fwd indefinitely. Small biz exception: avg gross receipts ≤ $30M (2025) over prior 3 yrs. ATI ≈ EBIT post-2022.
Partnership current distribution rules
Nontaxable to extent of outside basis. Order: 1) Cash reduces basis first; 2) Property = lesser of inside basis or remaining outside basis. Cash > basis = capital gain. No loss on current distribution (liquidating only).
C-corp E&P calculation (start with taxable income)
Start: Taxable Income. ADD: tax-exempt muni interest, life insurance proceeds, NOL carryback used, DRD, federal tax refund, dividends-paid deduction. SUBTRACT: federal income tax, nondeductible expenses (50% meals, fines, life ins premiums), capital loss carryover used.
§965 transition tax (one-time, post-TCJA)
on accumulated post-1986 E&P of CFCs as of 11/9/17 or 12/31/17 (greater). Mandatory deemed repatriation; 8-yr installment election available.
§1202 qualified small business stock (QSBS) exclusion
Excludable gain = min(Realized gain, max($10M cumulative, 10× basis)). Requirements: 1) C-corp QSBS held >5 yrs 2) ≤$50M gross assets at issuance 3) original issuance to taxpayer 4) 80% active trade/business test.
§754 election — basis adjustments
§754 aligns inside basis to outside basis: 1) §734(b) adjusts after distributions exceeding outside basis. 2) §743(b) adjusts after sale/transfer of partnership interest. 3) Mandatory if substantial built-in loss > $250K. 4) Once elected, applies to all future events.
§250 Foreign-Derived Intangible Income (FDII) deduction
; effective rates 13.125% (FDII) / 10.5% (GILTI). Combined deduction limited to taxable income — cannot create or increase an NOL.
Entity Tax Planning
9 items
Entity selection: tax comparison
Sole prop/partnership/S-corp: pass-through, SE tax applies.
C-corp: 21% flat, double tax on dividends.
S-corp: split salary (SE tax) vs. distribution (no SE).
QBI 20%: pass-throughs only, not C-corps.
Dividends-received deduction (DRD) — corporate
ownership: 50% DRD.
but : 65% DRD.
(affiliated): 100% DRD.
DRD limited to applicable percentage of taxable income before DRD, unless allowing full DRD would create/increase an NOL.
§338(h)(10) election — stock acquisition treated as asset acquisition
Joint buyer+seller election: 1) Stock purchase recharacterized as asset sale at FMV 2) Buyer gets stepped-up asset basis (new depreciation/amortization) 3) Seller recognizes gain on deemed asset sale (often ordinary) 4) Eligible: S-corp or 80%-owned C-corp sub 5) File Form 8023.
Like-kind exchange post-TCJA — tax planning
§1031 post-TCJA: 1) Real property only (held for investment/business) 2) Identify replacement ≤45 days 3) Close ≤180 days 4) Use qualified intermediary (no constructive receipt of cash) 5) Related-party: 2-yr hold 6) Boot → gain recognized up to boot.
Choice of entity — pass-through vs C-corp comparison
Pass-through ATCF = Income × (1 - (OrdRate + NIIT) × (1 - QBI%)); C-corp ATCF = Income × (1 - 21%) × (1 - DivRate). Compare: QBI 20%, basis tracking, FICA on S-corp wages, fringe benefits favor C, double tax on distribution/exit.
§382 NOL limitation after ownership change
— triggers on >50pp ownership shift by 5%+ holders over 3 yrs; caps annual use of pre-change NOLs, credits, and capital losses.
Estate freeze techniques (GRAT, IDGT)
GRAT: ; zeroed-out if PV(annuity)=FV. IDGT: grantor pays income tax (tax-free gift to trust); assets outside estate. Both freeze value; appreciation > §7520 escapes transfer tax.
Reorganization types (A, B, C, D, E, F)
A=statutory merger/consolidation; B=stock-for-stock (≥80% control after, solely voting stock); C=assets-for-voting-stock (substantially all assets, liabilities assumed); D=divisive §355 (spin/split-off); E=recapitalization; F=mere change in form/identity. All tax-free if requirements met.
§355 spin-off / split-off / split-up
Tax-free if ALL: 1) ATB — parent + sub ran active trade/business ≥5 yrs; 2) Distribute ≥80% control (vote + value); 3) Continuity of Interest; 4) Continuity of Business Enterprise; 5) Business Purpose; 6) Not a Device for E&P bailout. Fail = dividend to extent of E&P.
Property Transactions
7 items
Installment sale gross profit ratio
Contract price = selling price qualifying debt assumed.
Like-kind exchange: boot and gain recognition
Deferred gain reduces replacement basis.
§1031 boot rules — gain recognition order
Recognized gain = min(Realized gain, Boot received). Boot = cash + net liab. relief + non-LK property. Loss never recognized. New basis = Old basis + Boot given − Boot received + Gain recognized.
Installment sale — gross profit ratio + allocation
; Gain_t = Cash_t × GP Ratio. Interest = ordinary (impute if absent). §1245/1250 recapture = 100% in year of sale, even with no cash.
Charitable contribution of appreciated long-term property
Public charity: Deduct FMV, 30% AGI limit, 5-yr CF; no gain recognized. Private foundation (non-publicly-traded): Deduct BASIS only, 20% AGI limit. .
Estate basis vs gift basis comparison
ESTATE §1014: basis = FMV at death (or AVD +6mo if elected); holding period auto-LT. GIFT §1015: gain basis = donor's carryover (HP tacks); loss basis = min(donor's, FMV at gift). Trap: gifting loss property — sell first, gift cash.
§1245 vs §1250 recapture mechanics
§1245 (personal prop): Ordinary = min(Gain, AccumDep); rest §1231. §1250 (real prop): Ordinary = min(Gain, ExcessDep over SL); remaining depreciation = Unrecaptured §1250 gain @ 25% max; rest §1231. Post-1986 SL → §1250 ordinary rare.