What CPA Tax Compliance and Planning actually tests
TCP is a Discipline section (choose 1 of 3: BAR, ISC, or TCP):
| Area | What it covers |
|---|---|
| Individual Tax Compliance & Planning | Retirement planning, self-employment planning, passive activity rules, AMT |
| Property Taxation & Basis Planning | Stepped-up basis at death, stock options (ISO vs. NQSO), QOZ |
| Entity Selection & Planning | C corp vs. S corp vs. partnership vs. LLC, QBI (§199A) |
| International Tax | GILTI, subpart F income, foreign tax credit, FIRPTA |
| Estate & Gift Planning | GRATs, SLATs, IDGTs, generation-skipping transfer tax |
| Tax Research & Professional Standards | IRC hierarchy, substantial authority standard, SSTS compliance |
Why entity selection is the section's connective thread
Nearly every TCP topic eventually feeds back into the "which entity structure minimizes total tax" question — the QBI deduction, self-employment tax exposure, and international tax rules all shift depending on whether income flows through a sole proprietorship, partnership, S corp, or C corp. Understanding these interactions, not just each rule in isolation, is what TCP is really testing.
Sample question: QBI Deduction
Tax Compliance and Planning · Medium difficulty
A sole proprietor has qualified business income (QBI) of $100,000, and taxable income well below the phase-out threshold. Assuming the QBI deduction is limited to 20% of QBI, what is the deduction?
A. $10,000
B. $15,000
C. $20,000
D. $25,000
The correct answer is C — $20,000.
Under IRC §199A, the QBI deduction is generally 20% of qualified business income: $100,000 × 20% = $20,000. Above certain taxable income thresholds, the deduction becomes subject to W-2 wage and unadjusted basis limitations (and specified service trades or businesses may be excluded entirely) — but below the threshold, the flat 20% applies cleanly.
Under IRC §199A, the QBI deduction is generally 20% of qualified business income: $100,000 × 20% = $20,000. Above certain taxable income thresholds, the deduction becomes subject to W-2 wage and unadjusted basis limitations (and specified service trades or businesses may be excluded entirely) — but below the threshold, the flat 20% applies cleanly.