Entity Classification and Elections
Federal tax classification depends on the legal entity, number of owners, default rules, and any valid election.
Study this topicPart 2 / Businesses
Business Entities and Considerations
Identify entity classification and lifecycle rules, then follow income, basis, distributions, elections, and filing obligations through partnerships and corporations.
12 focused lessons
Learn the rule, then work the decision.
Every lesson pairs a direct answer with a practical scenario, a common wrong turn, and a repeatable study action.
Sole Proprietorships and Qualified Joint Ventures
A sole proprietor reports business activity directly, while eligible spouses may elect qualified joint-venture treatment instead of partnership filing.
Study this topicPartnership Formation and Contributions
Contributions of cash, property, services, and liabilities can affect partnership basis, partner outside basis, recognition, and capital accounts differently.
Study this topicPartner Basis and Liabilities
Outside basis changes with contributions, income, loss, distributions, and the partner's share of qualifying partnership liabilities.
Study this topicPartnership Distributions and Guaranteed Payments
Partnership distributions and guaranteed payments follow different recognition, basis, character, and self-employment rules.
Study this topicPartnership Filing, Audit, and Termination
Partnerships have entity-level filing duties, centralized audit rules, elections, penalties, and winding-up consequences even though tax often passes through.
Study this topicC Corporation Formation and Section 351
Section 351 can defer gain when property is transferred to a corporation for stock and the transferors satisfy control requirements immediately after.
Study this topicCorporate Income, Deductions, and Earnings and Profits
Corporate taxable income and earnings and profits are related but distinct computations that drive different tax consequences.
Study this topicCorporate Distributions, Redemptions, and Liquidations
Corporate payments to shareholders can be dividends, return of basis, gain, sale treatment, or liquidating distributions depending on E&P and transaction facts.
Study this topicS Corporation Eligibility and Election
An S election requires an eligible domestic corporation, permitted shareholders, one class of stock, timely filing, and required consents.
Study this topicS Corporation Shareholder Basis and Losses
A shareholder tracks stock basis and direct-loan debt basis to determine loss deductions and distribution consequences.
Study this topicBusiness Employment and Information Returns
Businesses must classify workers, obtain taxpayer information, deposit payroll taxes, and issue the correct wage or information return on time.
Study this topicTurn reading into retrieval
Test Part 2 with current IRS sample questions.
Use the free sample for immediate explanations, then continue with the PassFast question bank when you are ready for full coverage and performance reporting.