Study guide
1.1 Current Exam Cycle, Blueprint & Study Decisions
EA Part 2 — Businesses: Free Study Guide 2026 Exam
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1 Chapter 1: Exam Cycle & Preparation
1.1 Current Exam Cycle, Blueprint & Study Decisions
2 Chapter 2: Business Entity Choices & Classification
2.1 Business Structures & Liability: Sole Proprietorship, Partnership, LLC, and Corporation 2.2 Entity Classification & Check-the-Box Rules (Form 8832) 2.3 Classification Elections, Default Rules & the 60-Month Limitation 2.4 EINs, Entity Changes & Closing a Business
3 Chapter 3: Sole Proprietorships
3.1 Schedule C Gross Income & Allowable Business Expenses 3.2 Self-Employment Tax (Schedule SE) & Statutory Employees 3.3 Business Use of Home (Simplified vs. Actual Method)
4 Chapter 4: Partnership Formation & Basis
4.1 Formation & Property Contributions under Section 721 4.2 Partner Liabilities under Section 752 (Recourse vs. Nonrecourse) 4.3 Partnership Tax Year, Accounting Periods & Form 1065 Filing 4.4 Family Partnerships, Gifted Interests & Income Allocations
5 Chapter 5: Partnership Basis & Loss Limitations
5.1 Outside Basis Calculations & Ordering Rules 5.2 Basis, At-Risk (§465) & Passive Loss (§469) Limitations 5.3 Excess Business Losses (§461(l)) & Related-Party Transactions (§707) 5.4 Debt Discharge: Partnership vs. S Corporation
6 Chapter 6: Partnership Operations & Distributions
6.1 Form 1065, Schedule K & Schedule K-1 Separately Stated Items 6.2 Guaranteed Payments vs. Distributive Shares 6.3 Nonliquidating & Liquidating Distributions & Section 751 Hot Assets 6.4 Centralized Partnership Audits, Notices & Opting Out
7 Chapter 7: Partnership Dispositions & Basis Adjustments
7.1 Sale or Exchange of a Partnership Interest 7.2 Optional Basis Adjustments (Section 754, 743(b) & 734(b)) 7.3 Partnership Terminations, Mergers & Divisions
8 Chapter 8: C Corporation Formation & Structure
8.1 Corporate Formation & Section 351 Transfer Requirements 8.2 Boot, Section 357 Liabilities in Excess of Basis & Section 1244 Stock 8.3 Capital Structure: Debt vs. Equity & Section 385 Principles 8.4 Controlled Groups & Closely Held Corporations
9 Chapter 9: C Corporation Operations & E&P
9.1 Form 1120 Gross Income, Corporate Deductions & 21% Flat Tax Rate 9.2 Book-Tax Differences (Schedule M-1 vs. Schedule M-3) 9.3 Current vs. Accumulated Earnings & Profits (E&P) 9.4 Accumulated Earnings & Personal Holding Company Taxes 9.5 Corporate Minimum Tax & Foreign Tax Credits
10 Chapter 10: C Corporation Distributions & Liquidations
10.1 Property Distributions, Dividends & Constructive Distributions 10.2 Stock Redemptions (§302) & Corporate Liquidations (§331/§336)
11 Chapter 11: S Corporation Eligibility & Operations
11.1 S Corporation Requirements & Form 2553 Election Rules 11.2 Election Deadlines, Late Election Relief (Rev. Proc. 2013-30) 11.3 Form 1120-S Operations, Reasonable Compensation & 2% Shareholder Fringes
12 Chapter 12: S Corporation Basis, Distributions & Taxes
12.1 Stock & Debt Basis Calculations, Ordering Rules & Form 7203 12.2 S Corp Distributions, Accumulated Adjustments Account (AAA) & E&P Tiers 12.3 Entity-Level Taxes (BIG §1374 & Passive Income §1375) & Termination
13 Chapter 13: Accounting Periods & Methods
13.1 Tax Years: Calendar, Fiscal, and 52-53 Week Years 13.2 Cash vs. Accrual Method & Section 448 Gross Receipts Test 13.3 Changes in Accounting Method (Form 3115) & Section 481(a) Adjustments 13.4 2025 Domestic Research Expensing & Foreign Research
14 Chapter 14: Business Gross Income & Inventory
14.1 Gross Receipts & Inclusions in Business Gross Income 14.2 Cost of Goods Sold (COGS) & Inventory Valuation (Cost, LCM, FIFO, LIFO) 14.3 Section 263A Uniform Capitalization (UNICAP) & Small Business Exemption
15 Chapter 15: General Business Deductions & Limits
15.1 Ordinary & Necessary Business Expenses (§162) & Disallowances 15.2 Business Meals, Gifts & Travel 15.3 Vehicle Expenses, Mileage & Substantiation 15.4 Business Interest Expense Limitation (§163(j)) & Business Taxes
16 Chapter 16: Business Losses & Net Operating Losses
16.1 Net Operating Losses (NOLs) 80% Taxable Income Cap & Carryforward Rules 16.2 Business Casualty, Theft & Disaster Losses 16.3 Business vs. Nonbusiness Bad Debts (Direct Write-Off Method §166)
17 Chapter 17: Section 199A Qualified Business Income Deduction
17.1 Section 199A Overview: 20% Deduction & Qualified Trades or Businesses 17.2 Specified Service Trades or Businesses (SSTBs) & Threshold Phase-Outs 17.3 W-2 Wage & UBIA Limitations Calculation & Aggregation Rules
18 Chapter 18: Depreciation Principles & MACRS
18.1 Depreciable Property, Cost Basis & Capitalization vs. Repair Regulations 18.2 MACRS Property Classes (3, 5, 7, 15, 27.5, 39-Year) & Depreciation Methods 18.3 Depreciation Conventions: Half-Year, Mid-Quarter (40% Rule) & Mid-Month
19 Chapter 19: Section 179 Expensing & Bonus Depreciation
19.1 Section 179 Expensing: $2.5M Limit, $4M Phase-Out & Taxable Income Limitation 19.2 2025 Bifurcated Bonus Depreciation: Pre-Jan 20 (40%) vs. Post-Jan 19 (100% OBBBA) 19.3 Listed Property Rules, >50% Business Use & Section 280F Luxury Auto Limits
20 Chapter 20: Amortization & Intangible Assets
20.1 Section 197 Intangibles & 15-Year Straight-Line Amortization 20.2 Start-Up (§195) & Organizational (§248/§709) Expenditures: $5,000 Rule & 180-Month Amortization 20.3 Depletion: Cost Depletion vs. Percentage Depletion for Natural Resources
21 Chapter 21: Business Property Dispositions & Recapture
21.1 Sale of Business Property & Reporting on Form 4797 21.2 Section 1231 Netting Process & 5-Year Lookback Recapture Rule 21.3 Section 1245 (Full Personal Property Recapture) & Section 1250 / Unrecaptured §1250 Gain
22 Chapter 22: Like-Kind Exchanges & Involuntary Conversions
22.1 Section 1031 Like-Kind Exchanges (Real Property Only, 45-Day/180-Day Deadlines) 22.2 Boot Recognition & Basis Calculation for Replacement Property 22.3 Section 1033 Involuntary Conversions & Replacement Periods
23 Chapter 23: Business Tax Credits
23.1 General Business Credit (Form 3800), Net Income Tax Limit & Carryback/Carryforward 23.2 Key Business Tax Credits: Research Credit (§41), WOTC (§51), Small Employer Health (§45R)
24 Chapter 24: Worker Classification & Information Reporting
24.1 Employee vs. Independent Contractor: Common Law Control & Form SS-8 24.2 Section 530 Relief Requirements & Consequences of Misclassification 24.3 Information Returns: Form 1099-NEC vs. 1099-MISC, Form W-2/W-3 & Backup Withholding
25 Chapter 25: Employment Taxes & Compliance
25.1 Form 941 (Quarterly Payroll Tax Return) & Federal Income Tax / FICA Withholding 25.2 Federal Unemployment Tax (Form 940) & State Unemployment Credit 25.3 Payroll Tax Deposit Schedules (Monthly vs. Semi-Weekly, $100K Rule) & Trust Fund Penalty (§6672)
26 Chapter 26: Fiduciary Income Taxation (Trusts & Estates)
26.1 Principles of Fiduciary Income Taxation & Form 1041 Filing Requirements 26.2 Fiduciary Tax Years, Exemptions & Estimated Payments 26.3 Simple and Complex Trusts, Tiers & Distribution Timing 26.4 DNI Computation & Fiduciary Expense Allocation 26.5 Income Distribution Deduction & Schedule K-1 (Form 1041) Flow-Through 26.6 Foreign Trusts, Grantor Control & Abusive Schemes
27 Chapter 27: Tax-Exempt Organizations & Farm Taxation
27.1 Recognition of Tax Exemption (Form 1023/1024) & §501(c)(3) Standards 27.2 Maintaining Exemption, Political Activity & Excess Benefits 27.3 Form 990 Series Annual Returns & Unrelated Business Taxable Income (UBTI / Form 990-T) 27.4 Unrelated Business Income & Debt-Financed Property 27.5 Farm Income, Schedule F & Conservation Costs 27.6 Farm Income Averaging & Conservation Deductions 27.7 Farm Disaster Elections & Livestock Replacement 27.8 Farm Rentals, Estimated Tax & Farm Depreciation
28 Chapter 28: Business Records, Reporting & ACA
28.1 Financial Statements, Records & Owner Transactions 28.2 Filing Extensions, International Forms & Cash Reporting 28.3 ACA Employer Size, Coverage & Reporting
29 Chapter 29: Employer & Self-Employed Retirement Plans
29.1 Qualified Plans, 401(k) Limits & Nondiscrimination 29.2 SEPs, Self-Employed Contributions & Owner Compensation 29.3 SIMPLE IRAs & Small-Employer Contribution Choices 29.4 Plan Reporting, Loans & Prohibited Transactions
30 Chapter 30: Rental Property & Passive Activities
30.1 Rental Income, Expenses & Conversion Basis 30.2 Rental Losses, Active Participation & Real Estate Professionals 30.3 Vacation Homes, Personal Days & Rental Allocations
1.1 Current Exam Cycle, Blueprint & Study Decisions
Key Takeaways Explain This Topic AI
The 2026–2027 SEE uses 2025 tax law as amended through December 31, 2025; later-year amounts do not replace that baseline.
Part 2 contains 100 questions, of which 85 are scored, with 3.5 hours of testing and a 500 passing score on the 200–800 scale.
The official Part 2 outline assigns 30 scored items to entities, 37 to preparation, and 18 to specialized taxpayers.
Last updated: October 2026
Identify the applicable examination
Part 2 — Businesses is one of the three parts of the IRS Special Enrollment Examination (SEE). It tests business taxation rather than the individual-return emphasis of Part 1 or the representation and procedure emphasis of Part 3. A candidate can take the parts in any order, but each appointment covers one part. Passing Part 2 alone does not confer enrolled-agent status: passing all required parts, applying for enrollment, and satisfying the IRS suitability check are separate steps.
For the domestic July 1, 2026–February 28, 2027 window, use calendar year 2025 unless the question specifies otherwise. The law cutoff is December 31, 2025 . Thus a 2026 examination can test a 2025 depreciation election or contribution limit. A web page's current date is not enough to establish which amount applies. Read the tax-year heading and the provision's effective date before importing a number into a calculation.
Translate the outline into preparation
- Published domain Scored questions Share of scored content
- Business Entities and Considerations 30 About 35.3%
- Business Tax Preparation 37 About 43.5%
- Specialized Returns and Taxpayers 18 About 21.2%
The counts describe the 85 scored items, rather than all 100 items displayed. The remaining 15 are experimental and are not identified for candidates. Treat every question as potentially scored. The outline does not publish a guaranteed count for a particular deduction, form, or section of the Code. A study guide cannot promise that a memorized list of five rules will produce five questions.
For entities, practice the same economic transaction under different tax classifications. A bank loan can increase a partner's outside basis but does not automatically create S corporation shareholder debt basis. For preparation, link receipts, basis, timing, character, and reporting forms. For specialized returns, distinguish a trust's accounting income from DNI, a rental's economic loss from its deductible loss, and an employer contribution from an employee salary deferral.
Logistics that change study decisions
PSI administers the examination. Each part has 100 multiple-choice questions , 3.5 hours of testing , and an approximately four-hour appointment . The IRS describes two scheduled ten-minute breaks. The fee is $317 per part , payable again for a new attempt. A PTIN is needed before scheduling. Read the current bulletin for identification, calculator, break, test-center, and remote-proctor rules; a personal tax reference book is not a permitted substitute for learning the rules.
The passing scaled score is 500 on a 200–800 scale . This is not a published requirement to answer exactly 62.5% or 75% correctly. A passing report gives a passing designation rather than a numerical score above the threshold. Practice percentages are useful diagnostics, but do not convert them into an invented official passing percentage.
A candidate may attempt each part up to four times in a testing window and must wait at least 24 hours before rescheduling the same part. Passing scores ordinarily carry over for three years from the date that part was passed. Apply on Form 23 within one year of passing the final required part. The current bulletin describes specific carryover extensions related to the 2026 transition and international delay; those exceptions should be checked against the candidate's actual dates.
Work a source-selection scenario
Suppose a question asks for 2025 business mileage. One resource says 70 cents for 2025, another says 72.5 cents for 2026, and an older draft says 70.5 cents. Use the applicable 2025 IRS notice: 12,000 business miles produces $8,400 before separately allowable parking and tolls. Neither the examination's 2026 appointment year nor an unsupported draft changes the tax-year input.
Next consider equipment acquired in January 2025. Do not infer that every item placed in service in 2025 automatically receives 100% bonus depreciation. Acquisition timing, binding-contract rules, placed-in-service timing, eligibility, and elections all matter. The separate §179 annual limits apply differently. Build a short worksheet recording the controlling date for each provision before doing arithmetic.
A practical review sequence
Read the transaction and identify the taxpayer and tax classification.
Circle the tax year and distinguish acquisition, payment, service, and disposition dates.
Determine the basic income or deduction rule, then test exceptions and limitations.
Compute basis and character before selecting a reporting form.
Recalculate the answer without looking at the choices; then explain why the alternatives fail.
Maintain a dated list of missed rules rather than memorizing option positions. Revisit both entity and owner consequences when a question gives a distribution, a liability, or a pass-through loss. Those connections are central to business-return preparation.
Official references
IRS enrolled-agent FAQ and PSI Candidate Information Bulletin, revised October 9, 2026 , checked October 17, 2026. The IRS currently reports international scheduling and testing as delayed; do not assume the domestic window establishes international availability.