This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- How to calculate the 10% limitation for corporate charitable contributions based on modified taxable income.

- The three ownership tiers for the Dividends-Received Deduction (DRD) and how they determine the deduction percentage (50%, 65%, or 100%).

- The critical difference in capital loss treatment: corporations can only offset capital gains, unlike the individual $3,000 deduction against ordinary income.

- The carryover rules for corporate net capital losses, which are carried back 3 years and forward 5 years as short-term losses.

- The modern rules for Net Operating Losses (NOLs), which are carried forward indefinitely but limited to 80% of taxable income.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- How to qualify for a tax-free incorporation under Section 351 by meeting the property-for-stock and 80% control tests.

- The critical distinction between transferring property (non-taxable) versus services (taxable) in exchange for stock.

- How receiving "boot," such as cash or other property, can trigger gain recognition in an otherwise tax-free exchange.

- The most common exam trap: how liabilities assumed by the corporation in excess of the property's basis create a taxable gain under Section 357(c).

- A simple mental shortcut for calculating the shareholder's basis in the new corporate stock after the exchange.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- Eligible entities use Form 8832 to elect a tax classification other than their default, such as choosing to be taxed as a corporation.

- An election's effective date has strict timing rules: it cannot be more than 75 days before the filing date or more than 12 months after.

- Once an entity changes its classification via Form 8832, it is generally prohibited from changing it again for a 60-month period.

- A common exam trap is confusing Form 8832 (the check-the-box election) with Form 2553, which is used specifically to elect S corporation status.

- Understanding the default tax classifications (e.g., a multi-member LLC is a partnership) is key to knowing when an election is necessary.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- A Single-Member LLC (SMLLC) is a disregarded entity for federal income tax purposes by default.

- An SMLLC owned by an individual reports its business activities on the owner's personal tax return, typically using Schedule C.

- When a corporation owns an SMLLC, the LLC's activities are treated as a branch or division on the corporation's tax return.

- An SMLLC is regarded as a separate entity for employment tax purposes and must have its own EIN to file payroll tax returns like Form 941.

- The EA exam frequently tests the exception: an SMLLC is disregarded for income tax but treated as a separate entity for employment and certain excise taxes.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- The default tax classification for a single-member LLC is a disregarded entity, with income reported on the owner's personal return, such as on Schedule C.

- A multi-member LLC is treated as a partnership by default, requiring the filing of Form 1065 and the issuance of Schedule K-1s to its members.

- How LLCs can change their default tax classification by filing Form 8832, the Entity Classification Election, to be taxed as a corporation.

- The critical distinction between an LLC's legal structure under state law and its federal tax classification under IRS rules.

- A common exam trap involving absolute wording that ignores an LLC's ability to elect a different tax status.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- That the technical termination rule, triggered by a 50% ownership change, was repealed and is a common exam trap.

- The two conditions under IRC §708(b)(1) that cause an actual partnership termination: cessation of all business and no continuation in partnership form.

- The critical distinction between a partnership's dissolution under state law and its termination for federal tax purposes.

- The tax consequences of termination, such as filing a final Form 1065 and issuing final Schedule K-1s.

- The rules for a partner to recognize a capital gain or loss upon receiving a final liquidating distribution.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- Partners are taxed on their distributive share of income shown on Schedule K-1, not on cash distributions they receive.

- Separately stated items, like capital gains or charitable contributions, retain their character and flow through to the partner's individual return.

- A general partner's share of ordinary business income in Box 14 is typically subject to self-employment tax, while a limited partner's is not.

- Box 20, Code Z, provides the necessary information to calculate the Section 199A QBI deduction, not the deduction amount itself.

- The Schedule K-1 acts as a crucial informational bridge, linking the partnership's Form 1065 to the partner's Form 1040.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- Gain is recognized by a partner only when a cash distribution exceeds their outside basis.

- A partner's basis in distributed property is generally a carryover basis from the partnership, but it cannot exceed the partner's outside basis in their interest.

- The key difference between a current (non-liquidating) and a liquidating distribution lies in how the basis of distributed property is determined and whether a loss can be recognized.

- Marketable securities are often treated as cash in partnership distributions, which can trigger unexpected gains.

- A loss can only be recognized on a liquidating distribution that consists exclusively of cash, unrealized receivables, and inventory.

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- Guaranteed payments under §707(c) are fixed payments for services or capital use, determined without regard to partnership income.

- The receiving partner reports guaranteed payments as ordinary income, while the partnership deducts them as a business expense.

- Payments made for services are subject to self-employment tax for the recipient partner.

- A partner must report guaranteed payment income in the same tax year the partnership deducts it, regardless of when the cash is received.

- Guaranteed payments are required even if the partnership has a loss, and the payment can create or increase the partnership's ordinary loss.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- How to calculate Section 704(c) built-in gain when a partner contributes appreciated property.

- The mandatory allocation of pre-contribution gain back to the contributing partner when the partnership sells the asset.

- The definition and impact of the "ceiling rule" limitation under the traditional allocation method.

- The purpose of the traditional method with curative allocations and the remedial method in correcting ceiling rule distortions.

- How to properly allocate post-contribution appreciation based on the partnership agreement.

For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep