SEE Part 2 Domains Explained

The short version

Part 2 has three domains: Business Entities and Considerations (30 scored questions), Business Tax Preparation (37), and Specialized Returns and Taxpayers (18). The counts come from the IRS Candidate Information Bulletin revised October 9, 2026 and add up to the 85 scored questions. Percentages below are our own arithmetic. Questions follow tax law as amended through December 31, 2025, and relate to calendar year 2025.

Domain 1: Business Entities and Considerations (30 questions, about 35%)

What it covers. Sole proprietorships and qualified joint ventures, partnerships, corporations, S corporations, LLCs, and tax-exempt entities. Entity default classifications and elections, EINs, accounting periods, W-2, W-4, and 1099 reporting, and the hobby-versus-business question. Partnerships: income and flow-through, family partnerships, guaranteed payments, contributions of property, outside basis, disposition, dissolution, penalties, and the partnership audit rules. Corporations: earnings and profits, dividends, special deductions, liquidations and redemptions, accumulated earnings tax, Section 351, and controlled groups. S corporations: qualifying shareholders, elections, distributions, shareholder basis, termination, and debt discharge.

In practice. This is the domain where you track basis through a year: start with contributed basis, add income, subtract losses and distributions, adjust for debt. Questions often change one fact, such as whether debt is recourse, whether a shareholder lent money directly, or whether a distribution is current or liquidating.

Typical traps.

Confusing partnership and S corporation debt treatment. Partnership liabilities can add to outside basis; S corporation shareholders get basis only from loans they make directly.
Treating a guaranteed payment like a distributive share.
Forgetting that a redemption can be a sale or a dividend depending on the tests met.
Ordering distributions wrongly: the layer rules differ for a corporation with and without earnings and profits.

Practice. Work basis computations by hand until the order is automatic. Write a one-line rule for each “sale versus dividend” and “current versus liquidating” pair.

Domain 2: Business Tax Preparation (37 questions, about 44%)

What it covers. Business income and cost of goods sold, including inventory and uniform capitalization rules; at-risk limits; cancellation of debt; deductions for compensation, rent, depreciation, amortization, Section 179, bonus depreciation, bad debts, travel, meals, vehicles, interest, insurance, taxes, and casualty losses; employment taxes; the qualified business income deduction; general business credits; net operating losses; and the home office. Then business assets (basis, disposition, like-kind exchanges, capitalization versus repair), reading financial records (income statement, balance sheet, accounting method changes and Form 3115, depreciation recapture, K-1 items, Schedules M-1, M-2, and M-3), and advising business taxpayers on filing, deposits, record-keeping, entity choice, and worker classification.

In practice. This is the largest domain, so it carries the most weight. Expect a mix of “which rule applies” questions and short calculations: a depreciation figure, a gross profit percentage, a trust fund penalty, a QBI limit.

Typical traps.

Cash versus accrual rules for bad debts and prepaid expenses.
Depreciation conventions: the mid-quarter test and the mid-month convention for real property.
Mixing up business mileage with commuting.
Applying a limit from the wrong year.

Practice. Rebuild each calculation from the form instructions. For depreciation, practice the order of operations: Section 179 first, then bonus, then regular MACRS on what remains.

Domain 3: Specialized Returns and Taxpayers (18 questions, about 21%)

What it covers. Trust and estate income tax (simple, complex, grantor trusts, distributable net income, Form 1041 items), exempt organizations (501(c) status, applying with Form 1023 or 1024, Form 990 series, unrelated business taxable income), retirement plans (contributions, SEP and SIMPLE plans, prohibited transactions, qualified and non-qualified plans, nondiscrimination), farmers (farm income, depreciation, disaster provisions, farm rental on Form 4835, income averaging on Schedule J), and rental property (real estate professional status, passive loss limits, vacation homes, repairs versus capital improvements).

In practice. It is the smallest domain but the most scattered. Each topic is a small, separate body of rules, so shallow review gets you partial credit on everything and full credit on little.

Typical traps.

Form 4835 versus Schedule F for crop-share rent.
Distributable net income and which items carry out to beneficiaries.
The rental of a home for fewer than 15 days.
Prohibited transactions in a retirement plan.

Practice. Make a one-page summary for each of the five topics, then test yourself with mixed sets.

What changes every year

The exam covers calendar year 2025 for now, but the numbers inside the rules move yearly. Check IRS-published figures, not older books, for:

Section 179 dollar limit and phase-out threshold, and the bonus depreciation percentage and its acquisition-date rules. For 2025, IRS Publication 946 gives a Section 179 limit of $2,500,000, and IRS Publication 463 describes 100% bonus depreciation for property acquired after January 19, 2025.
Standard mileage rates, per diem rates, and vehicle depreciation caps.
QBI thresholds and phase-in ranges.
Retirement plan contribution limits and compensation limits.
Social Security wage base and employment tax deposit thresholds.
Form 1041 brackets, Form 1099 reporting thresholds, and information-return penalties.

When a published figure differs from a number in this guide, trust the IRS.

More guides for SEE-PART2

Next step

Test your recall on the sample questions page, which has one or more questions from each domain. For topic-by-topic drilling, the SEE Part 2 practice tests report your score by domain after every attempt.

Try these practice exams