SEE Part 2 Cheat Sheet: Key Facts to Review

The short version

This is a review sheet, not a textbook. Use it after you have studied, to find gaps and to refresh the distinctions that questions love to test. It does not cover everything on the exam, and it is not a replacement for the IRS publications and form instructions.

Tax-year warning. Amounts, thresholds, rates and percentages belong to a specific tax year. For exams from July 1, 2026 through February 28, 2027, the IRS bulletin says questions follow law as amended through December 31, 2025 and relate to calendar year 2025. This sheet leaves most figures out on purpose. Look up every number in the IRS source for that year before you memorize it.

Exam facts at a glance

Item	Fact (IRS bulletin revised October 9, 2026)
Questions	100, of which 85 are scored and 15 are unscored
Time	3.5 hours of exam time; 4-hour appointment
Sections	Questions 1-34, 35-67, 68-100, with a 10-minute break after the first two
Scoring	Scale 200 to 800; 500 passes
Domains (scored questions)	Entities 30, Business Tax Preparation 37, Specialized Returns 18
Tools	Closed book; on-screen calculator
Attempts	Up to four per part in a window; wait 24 hours between attempts
Carryover	A pass counts for three years

You cannot return to a finished section. Answer, flag and review inside each section before you confirm it.

Domain 1: Business Entities and Considerations

Pairs that get confused

Disregarded entity vs partnership. A single-owner LLC is disregarded by default; an LLC with more than one owner is a partnership by default. An election on Form 8832 changes classification. An S election is made on Form 2553.
Guaranteed payment vs distributive share. A guaranteed payment is set regardless of income and is deducted by the partnership. A distributive share depends on partnership income.
Partnership debt vs S corporation debt. A partner’s share of partnership liabilities changes outside basis. An S shareholder gets debt basis only from money lent directly to the corporation. Guaranteeing a loan is not the same as lending.
Current vs liquidating distribution. One continues the entity; the other ends the interest. The tax result differs.
Dividend vs sale treatment on a redemption. The redemption tests decide it, not what the paperwork is called.
Earnings and profits vs retained earnings. One is a tax concept used to classify distributions; the other is a book number.

Decision rules

If the scenario asks for a partner’s or shareholder’s basis, start from the beginning balance, then add contributions and income, then subtract distributions and losses. Debt adjustments follow the entity type.
If a C corporation pays a distribution, think of earnings and profits first. A distribution is a dividend to the extent of current and accumulated earnings and profits.
If an S corporation has no earnings and profits, a distribution is generally tax-free up to stock basis and gain above it.
If property is moved into a new corporation in exchange for stock and the transferors control the corporation afterward, think Section 351 non-recognition.
If a person might exceed the shareholder limit, or a partnership or corporation is a shareholder, think S election problems.

Traps

Using the wrong basis (stock basis vs debt basis) to test a loss limit.
Treating a salary-like payment to a partner as a W-2 wage.
Forgetting that a hobby is not a business, and that the profit-motive tests look at facts.

Domain 2: Business Tax Preparation

Pairs that get confused

Cash vs accrual. Bad debts, prepaid expenses and income timing follow the method. A cash-basis taxpayer generally cannot deduct a bad debt for income never reported.
Section 179 vs bonus vs regular depreciation. Apply them in that order: Section 179 first, then bonus, then regular MACRS on the rest. Section 179 is limited by taxable business income.
Repair vs improvement. Ask whether the work is a betterment, an adaptation to a new use, or a restoration. If so, capitalize it.
Employee vs independent contractor. Look at behavioral control, financial control and the relationship of the parties.
Accountable vs nonaccountable plan. An accountable plan needs a business connection, substantiation and return of excess advances within a reasonable time.
Trust fund taxes vs employer taxes. Withheld income tax and the employee’s share of Social Security and Medicare are trust fund amounts. A responsible person can be personally liable for them.

Decision rules

If a lot of the year’s property was placed in service late in the year, test for the mid-quarter convention. Real property uses the mid-month convention.
If the scenario changes an accounting method, think Form 3115.
If book and tax income differ, think Schedule M-1 (or M-3 for larger entities) and the nature of the difference: permanent or timing.
If the scenario involves a business loss, run the order of limits: basis, at-risk, then passive activity.
If real property is swapped for like property, like-kind rules may apply. Personal property exchanges are no longer eligible under current law.
If a QBI deduction is in play, check the type of business, taxable income against the threshold, and wage or property limits for that year.

Traps

Applying a limit from last year’s rules.
Treating commuting as business mileage.
Counting meals as fully deductible; check the percentage in that year’s rules.
Missing the difference between a Form 941 deposit schedule and a filing deadline.

Domain 3: Specialized Returns and Taxpayers

Pairs that get confused

Simple trust vs complex trust. A simple trust must distribute income currently; a complex trust may keep it or pay it out.
Grantor trust vs non-grantor trust. In a grantor trust the grantor reports the income.
Form 4835 vs Schedule F. A landlord who does not materially participate in crop-share rental reports on Form 4835. A farmer who operates reports on Schedule F.
Form 1023 vs Form 1024. The first is the 501(c)(3) application; the second is used for many other exempt categories.
SEP vs SIMPLE. A SEP is funded by the employer. A SIMPLE has its own contribution structure. Check the rules for the year.
Passive rental vs real estate professional. The professional status needs hours and material participation tests.

Decision rules

If a question asks what a beneficiary reports, think distributable net income, which caps the deduction and carries the character of the income.
If an exempt organization earns income from a regularly carried-on trade or business not related to its purpose, think unrelated business income and Form 990-T.
If a plan sells property to its owner or lends to a disqualified person, think prohibited transaction.
If a dwelling is rented for fewer than 15 days in the year, the income is not reported under the vacation-home rule.
If a farmer’s income swings, think income averaging on Schedule J.

Traps

Mixing up the retirement plan type and the nondiscrimination rules that go with it.
Forgetting that personal use days can turn a rental into a residence for tax purposes.

Last-day checklist

Reread this sheet and your own one-page summaries, not new material.
Redo the basis and depreciation order of operations once, on paper.
Confirm the tax year in every note you are using.
Check your PSI appointment, ID name match and arrival time. The IRS bulletin says you cannot test if you arrive 30 minutes or more late.
Plan your pace: answer, flag, and finish each section before the break.
Sleep. A rested brain beats one more hour of review.

More guides for SEE-PART2

Next step

Test the facts above with the sample questions, then read domains explained for the detail behind each domain. The full exam overview lists every page. When you want timed practice, our SEE Part 2 practice tests are original practice sets, not IRS material.

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