fbpx
Free Guide & MCQs

Ultimate Guide to the TCP Section: CPA Exam Blueprint and Study Resources

Area I – Tax Compliance and Planning for Individuals and Personal Financial Planning (30–40%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Individual compliance and tax planning considerations for gross income, adjusted gross income, taxable income and estimated taxes
Recall the impact of equity compensation awards on taxable income.
Recall items included in dermination and computation of Alternative Minimum Taxable income.
Consider the impact to an individual’s taxable income for certain items of gross income, including imputed interest on below-market rate loan and compensation earned while employed outside the U.S.
Calculate the tax on a child’s investment and other unearned income.
Consider the effect of changing tax rates and legislation on the timing of income and expense items for planning purposes given a specific scenario.
Identify projected tax savings through utilization of flexible spending accounts (FSAs) and qualified health savings accounts (HSAs) for planning purposes given a specific scenario.
Consider the impact of using either itemized deductions or the standard deduction for planning purposes given a specific scenario.
Calculate estimated tax payments required for an individual to avoid underpayment penalties given a specific planning scenario.
Calculate the potential tax savings when donating noncash property to a charitable organization given a specific planning scenario, including identification of the property to be donated to minimize the individual’s current-year tax liability.
Review an individual’s projected income and expenses prior to year end to determine the tax implications, and provide options to minimize tax liability given a specific planning scenario.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Compliance for passive activity and at-risk loss limitations (excluding tax credit implications)
Calculate the at-risk loss limitation for an activity in which an individual materially participates, including losses from pass-through entities and losses from real estate rental activities with active participation.
Calculate the passive activity loss limitations given a specific scenario, including the netting of passive activity gains and losses.
Calculate utilization of suspended losses on the disposition of a passive activity for tax purposes.
Review an individual’s basis schedules and supporting documentation for a pass-through entity, including any source data used to create the schedules, to confirm the correct allocation of a loss between the amounts suspended for at-risk limitations, suspended for passive activity rules, and allowed for tax purposes.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Gift taxation compliance and planning
Recall allowable gift tax deductions and exclusions for federal gift tax purposes.
Explain the unified transfer tax system and how the annual exclusion, marital deduction and the unified credit impact the planning for gifts and gift taxation.
Calculate the amount of taxable gifts for federal gift tax purposes.
Identify the potential tax savings from gifting ownership of noncash property to an individual given a specific planning scenario, including identification of the property to be gifted to minimize the donor’s future estate.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Personal financial planning for individuals
Demonstrate an understanding of the advantages and disadvantages of different qualified retirement plans, including traditional IRAs, Roth IRAs, 401(k)s, annuities, and employer-sponsored plans.
Demonstrate an understanding of the risks associated with different investment options, including equity securities, corporate bonds and municipal bonds.
Demonstrate an understanding of planning for funding post-secondary education, including qualified tuition programs, student loans, grants and scholarships.
Explain how insurance is used in planning to mitigate risk, including life insurance, long-term care insurance and umbrella policies.
Demonstrate an understanding of the implications of legal ownership of an asset and beneficiary designations on an estate and its beneficiaries.
Prepare a schedule to be used in the decision-making process to select a retirement plan from different options given a specific planning scenario, identifying the related advantages and disadvantages.
Calculate the return on investment (ROI) for different investment options, net of the tax impact, given a specific planning scenario.

Area II – Entity Tax Compliance (30–40%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. C corporations
1. Net operating and capital loss utilization Recall the limitations on the use of net operating losses when there is an ownership change.
Calculate the amount of a C corporation’s net operating loss for a given year and the related carryforward or carryback.
Calculate the amount of a C corporation’s capital loss utilized in the current year and the related carryforward or carryback.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Transactions between a shareholder and a C corporation (contributions to and distributions from a corporation and loans) Calculate a shareholder’s tax realized and recognized gain (loss) on the contribution of noncash property to a C corporation, and the C corporation’s basis in the property contributed.
Calculate the tax realized and recognized gain (loss) for both a C corporation and shareholders on a nonliquidating distribution of noncash property, and the shareholders’ basis in the property received.
Calculate the tax realized and recognized gain (loss) for both a C corporation and shareholders on a liquidating distribution, and the shareholders’ basis in the property received.
Calculate the amount and treatment of the cash distributions to shareholders in excess of a C corporation’s current and accumulated earnings and profits (E & P).
Review loan documents and supporting documentation to determine the tax implications of a loan between a shareholder and C corporation, including imputed interest.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Consolidated tax returns Recall the requirements for filing a consolidated federal Form 1120 – U.S. Corporation Income Tax Return.
Calculate taxable income for a consolidated federal Form 1120 – U.S. Corporation Income Tax Return, including elimination of intercompany transactions.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. International tax issues Explain the sourcing of income for a U.S. corporation with foreign operations.
Explain the sourcing of income for a foreign corporation with U.S. operations, including consideration of federal tax withholding requirements.
Explain the concept of a controlled foreign corporation (CFC) and the impact on a U.S. corporation’s taxable income.
Explain the concept of permanent establishment for a corporation and the activities that would create it.
Explain the difference between a foreign branch and foreign subsidiary with respect to federal income taxation to a U.S. corporation.
Explain the requirements related to Interest Charge Domestic International Sales Corporation (IC-DISC), foreign derived intangible income (FDII), base erosion and anti-abuse (BEAT) and global intangible low-taxed income (GILTI).
Calculate U.S. and foreign source income given a specific scenario.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. S corporations
1. Basis of shareholder’s interest Calculate the impact on a shareholder’s stock basis in an S corporation for tax purposes resulting from contributions of noncash property, including an S corporation’s assumption of debt on the contributed property.
Calculate the impact on a shareholder’s stock basis in an S corporation for tax purposes resulting from nonliquidating distributions of noncash property.
Calculate the impact on a shareholder’s debt basis in an S corporation for tax purposes resulting from loans made by a shareholder to an S corporation.
Review a shareholder’s stock and debt basis schedules in an S corporation for tax purposes and supporting documentation, including any source data used to create the schedule, to determine the accuracy of transactions reflected.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Transactions between a shareholder and an S corporation (contributions to and distributions from a corporation) Calculate a shareholder’s tax realized and recognized gain (loss) on the contribution of noncash property to an S corporation, and the S corporation’s basis in the property contributed.
Calculate the tax realized and recognized gain (loss) for both an S corporation and shareholders on a nonliquidating distribution of noncash property, and the shareholders’ basis in the property received.
Calculate the tax realized and recognized gain (loss) for both an S corporation and shareholders on a liquidating distribution, and the shareholders’ basis in the property received.
Calculate the allocation of S corporation income (loss) after the sale of a shareholder’s ownership interest in the S corporation for tax purposes.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Partnerships
1. Basis of partner’s interest Calculate the impact on a partner’s basis in a partnership for tax purposes resulting from contributions of noncash property, including a partnership’s assumption of debt on the contributed property.
Calculate the impact on a partner’s basis in a partnership for tax purposes resulting from nonliquidating distributions of noncash property.
Calculate the impact on a partner’s basis in a partnership for tax purposes resulting from recourse and nonrecourse partnership debt incurred during the current year, including loans made by a partner to a partnership.
Review a partner’s basis schedule in a partnership for tax purposes and supporting documentation, including any source data used to create the schedule, to determine the accuracy of transactions reflected.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Partnership and partner elections Recall partner elections applicable to a partnership for tax purposes (e.g., partnership tax year, adjustment to basis of property).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Transactions between a partner and a partnership (services performed by a partner and contributions to and distributions from a partnership) Calculate the tax implications of certain transactions between a partner and partnership (e.g., services performed by a partner) for tax purposes.
Calculate a partner’s tax realized and recognized gain (loss) on the contribution of noncash property to a partnership, and the partnership’s basis in the property contributed.
Calculate the tax realized and recognized gain (loss) for both a partnership and partners on a nonliquidating distribution of noncash property, and the partner’s basis in the property received.
Calculate the tax realized and recognized gain (loss) for both a partnership and partners on a liquidating distribution, and the partner’s basis in the property received.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Ownership changes Calculate the allocation of partnership income (loss) after the sale of a partner’s share in a partnership for tax purposes.
Calculate the revised basis of partnership assets due to a transfer of a partnership interest for tax purposes.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Trusts
1. Types of trusts Recall and explain the characteristics of various types of trusts, including simple trusts, complex trusts and grantor trusts.
Recall and explain a trust as a pass-through entity and the roles of grantor, trustee, and beneficiaries and the concept of corpus.
Recall and explain the characteristics of revocable trusts.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Income and deductions Identify the allocation of items between income and corpus in a given scenario.
Calculate a trust’s accounting income, distributable net income and taxable income, including the income distribution deduction.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
E. Tax-exempt organizations
1. Obtaining and maintaining tax-exempt status Recall the requirements to qualify as an IRC Section 501(c)(3) tax-exempt organization.
Recall the events that would cause an entity to lose its tax-exempt status.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Unrelated business income Recall the different types of unrelated business income for tax-exempt organizations for tax purposes.

Area III – Entity Tax Planning (10–20%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Formation and liquidation of business entities
Prepare a schedule that is used as an input to an entity selection decision that calculates the tax implications of noncash property transactions for multiple entity types.
Identify the type of business entity that is best described by a given set of legal characteristics.
Derive the tax implications of entity selection and formation decisions across multiple entity types and compare the results.
Derive the tax implications of entity liquidation decisions across multiple entity types and compare the results.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Tax planning for C corporations
Calculate the potential tax savings from utilization of net operating and capital loss carryovers.
Identify opportunities to optimize state and local income tax rules in tax planning for business expansion given a specific scenario, including apportionment of income and location of business.
Calculate the effect of changing tax rates and legislation on the timing of income and expense items for tax planning purposes given a specific scenario.
Calculate estimated tax payments for a C corporation in order to avoid underpayment penalties given a specific planning scenario.
Derive the tax implications to a shareholder and C corporation for a proposed transaction after formation of the corporation, including noncash property contributions and noncash property distributions.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Tax planning for S corporations
Calculate the projected amount subject to built-in gains for a proposed disposition of an asset in order to minimize the built-in gains tax due.
Identify the implications of terminating an S corporation election given a specific planning scenario.
Derive the tax implications to a shareholder and S corporation for a proposed transaction after formation of the corporation, including noncash property contributions and distributions, and loans and repayment of loans from and to a shareholder.
Derive the tax implications of a contemplated election to treat distributions to shareholders as being made from an S corporation’s accumulated earning and profits (AEP) and not from the accumulated adjustments account (AAA).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Tax planning for partnerships
Calculate the tax implications to a partner for the contribution to a partnership of noncash property that has appreciated or depreciated in value.
Calculate the tax implications of various types of payments to a partner, including guaranteed payments and a nonliquidating distribution.
Derive the tax implications to a partner and partnership for a proposed transaction, including a contribution of noncash property, a nonliquidating distribution of noncash property or the sale of a partnership interest.

Area IV – Property Transactions (disposition of assets) (10–20%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Nontaxable disposition of assets
1. Balance sheet/Statement of financial position Calculate the realized gain, recognized gain and deferred gain on like-kind property exchange and involuntary conversion transactions for tax purposes and the basis of the asset received as a result of the transactions.
Review asset sale and exchange transactions, and relevant supporting documentation, to determine whether they are taxable or nontaxable.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Amount and character of gains and losses on asset disposition and netting process
Identify the character of the gain and loss recognized by a taxpayer on the disposal of an asset given a specific scenario.
Calculate the Section 1231 capital gain and Section 1231 ordinary loss recognized for tax purposes on the disposition of an asset used in a trade or business.
Calculate the Section 1245 and Section 1250 depreciation recapture recognized for tax purposes on the disposition of an asset used in a trade or business.
Calculate the unrecaptured Section 1250 gain recognized for tax purposes on disposition of an asset used in a trade or business.
Calculate the loss allowed on the disposition of Section 1244 small business stock for tax purposes.
Calculate the amount of gain recognized on an installment sale.
Review a schedule of asset dispositions for the current year and supporting documentation, including any source data used, to determine the completeness and accuracy of the amount and the character of the gain or loss recognized for tax purposes.
Review and resolve discrepancies identified by automated diagnostic and validation checks to ensure the completeness and accuracy of the amount and character of a gain or loss reported on a tax return based on the source data used to prepare the return.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Related party transactions, including imputed interest
Recall related parties for tax purposes.
Calculate the direct and indirect ownership percentages of corporation stock or partnership interests to determine whether there are related parties for tax purposes.
Calculate a taxpayer’s gain or loss on a subsequent disposition of an asset to an unrelated third party that was previously purchased from a related party.
Calculate the amount and treatment of imputed interest on related party transactions for tax purposes.

Make Your Study Process Easier and more effective with SuperfastCPA

Take Your CPA Exams with Confidence

Watch the free training
Purchase Now

Products

Get Started

About

Helpful Links