Tax Reference

Business & Entity Tax

Entity selection, pass-through taxation, QBI, payroll obligations, executive compensation, and business deductions.
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The tax treatment of a business depends entirely on its entity structure. The same $300,000 of profit faces dramatically different tax outcomes depending on whether it flows through a sole proprietorship, S-corporation, partnership, or C-corporation. This section covers entity selection, the mechanics of each structure, and the deductions and credits available to businesses.

Entity Selection & Comparison
Guide
Business Entity Comparison
Full 12-factor comparison: sole prop, LLC, S-corp, C-corp, partnership.
Guide
S-Corp vs. LLC
SE tax savings, QBI interaction, compliance costs.
Guide
S-Corporation Basics
§1362 election, basis, BIG tax, AAA, §1375.
Guide
Partnership Tax Basics
§704(b) allocations, outside basis, §754 elections.
Guide
S-Corp Compensation
Reasonable salary, FICA optimization, distributions.
Guide
Form 7203 S-Corp Basis
Stock and debt basis tracking under IRC §1366/§1367. Loss limitation stacking, debt basis restoration, AAA vs basis.
Income & Deductions
Guide
QBI Deduction (§199A)
20% deduction, W-2 wage limits, SSTB classification.
Calculator
QBI Calculator
Estimate your §199A deduction.
Guide
Meals & Entertainment
50% limit, business meal rules, post-TCJA.
Calculator
Home Office Deduction
Simplified vs. actual method, exclusive use test.
Guide
Bonus Depreciation
100% permanent under OBBBA, §168(k), qualifying property.
Guide
R&D Tax Credit
IRC §41, four-part test, documentation requirements.
Guide
§163(j) Business Interest Limit
OBBBA EBITDA restored 2025. $31M small biz exception. 2026 capitalization rule, partnership EBIE allocation.
Guide
Form 461 Excess Business Loss
§461(l) permanent under OBBBA §70601. 2026 reset DOWN: $256K/$512K thresholds. Loss aggregation, NOL carryforward, W-2 wage trap.
Guide
§179 Expensing OBBBA Permanent
2026 cap $2,560,000 / phaseout $4,090,000 / full phase-out $6,650,000. OBBBA §70302 permanently doubled baseline. Heavy SUV $32,000. Applied BEFORE 100% bonus depreciation. §163(j) treats as amortization.
Guide
§168(n) Qualified Production Property
OBBBA §70307 created new §168(n) - 100% deduction for qualified production property (factories, refineries, agricultural/chemical production). Construction 1/20/2025-12/31/2028; placed in service through 12/31/2030. §1245 recapture. 95% de minimis. Notice 2026-16.
Guide
OBBBA §174A R&D Expensing + Form 3115
OBBBA created §174A for permanent domestic R&D expensing (2025+). Foreign R&D still 15-year. Small business retroactive election to 2022-2024 via §448(c) $31M test. Rev. Proc. 2025-28 procedures. Statement in lieu of Form 3115. §481(a) catch-up. §280C(c) credit coordination. AAR for BBA partnerships. 7/6/2026 deadline.
Guide
§461(l) Excess Business Loss: OBBBA Permanent
OBBBA made §461(l) permanent (no 2028 sunset). 2025: $313K single / $626K MFJ. 2026 RESET: $256K / $512K (base year reset to 2024 - approximately 18% lower than 2025). W-2 wages NOT business income. §1231 gains expand cap. NOL conversion at 80% limit. Form 461 mechanics. Order of limitations after basis, at-risk, passive. Equipment leasing tax shelter traps. Aggregation across pass-throughs codified.
Payroll & Compliance
Guide
Payroll Tax Guide
FICA, FUTA, §6672 trust fund penalty, worker classification.
Guide
Executive Compensation
ISOs, NSOs, RSUs, §83(b), §409A.
Guide
Form 3115 / §481(a)
Accounting method changes, catch-up adjustments.
Guide
OBBBA Tax Changes
All 2025 OBBBA provisions affecting businesses.
Guide
Business Sale Planning
§338(h)(10), asset vs. stock, §1060 allocation.
Additional Resources
Guide
Controlled Groups §1563
Related entities treated as one for retirement limits, §179.
Guide
S-Corp Tax Guide
Pass-through, reasonable comp, W-2/K-1 split, built-in gains.
Guide
Crowdfunding Tax
Reward vs. equity crowdfunding; income recognition rules.
Guide
UBIT - Nonprofit Tax
When nonprofits owe corporate tax; three-part test.
BREAKING
ERC Update
Employee Retention Credit status, audits, repayment programs.
Employee & Contractor Issues
Guide
Worker Classification
Employee vs contractor - Rev. Rul. 87-41, §530 relief, misclassification penalties, Form SS-8.
Guide
Gig Worker / 1099
Schedule C, 15.3% SE tax, quarterly estimated payments, deductions.
Advanced Planning
Guide
Installment Sales §453
Gross profit ratio, §453A interest charge on deferred gain, related party 2-year rule.
Guide
State PTET Elections
SALT workaround under Notice 2020-75 - NY/CA/NJ mechanics, OBBBA $40K cap.
Guide
Net Operating Loss
§172 indefinite carryforward, 80% taxable income cap, farming carryback exception.
Guide
R&D Deduction §174A
OBBBA restores immediate domestic R&D expensing, §280C(c) credit coordination.
Guide
§754 / §743(b) / §734(b): Partnership Basis Adjustments
Section 754 election complete mechanics. Single irrevocable election covers §743(b) (transfer of partnership interest) AND §734(b) (distribution to partner). TCJA substantial built-in loss §743(d) MANDATORY adjustment (>$250K basis over FMV OR transferee allocated loss >$250K) even without §754 election. §708(b)(1)(B) technical termination REPEALED. T.D. 10024 (January 10, 2025) related-party reportable transactions $5M threshold. Otay Project LP T.C. Memo 2026-21 economic substance denial. §755 capital gain class vs ordinary class allocation. §197 intangibles 15-year transferee amortization. Death-triggered §1014 coordination.
BREAKING
Cannabis & §280E
DOJ/DEA rescheduled medical cannabis April 22 2026. §280E eliminated for licensed medical.
Guide
Captive Insurance & §831(b)
$2.9M limit, Jan 2025 final regs, Apr 2026 TX court vacatur, circuit split.
Guide
§409A Deferred Compensation
6 permissible triggers, 20% excise tax penalty, stock option valuation.
Guide
§501(c)(3) Tax-Exempt Organizations
Organizational test, UBIT §511-513, private foundation excise taxes.
Guide
§368 Tax-Free Reorganizations
Types A/B/C/D, continuity of interest, boot recognition, step transaction.
Guide
§302 Corporate Redemptions
Capital gain vs. dividend, §318 attribution trap, complete termination waiver.
Guide
Oil & Gas Tax
15% percentage depletion, IDC immediate deduction, working interest exception.
Guide
Construction: PCM vs. CCM
§460 long-term contracts, $30M small contractor exception, look-back interest.
Guide
SaaS Sales Tax
Wayfair economic nexus, taxability by state, B2B exemptions.
Guide
Reinsurance Tax
§845 reallocation authority, BEAT on offshore premiums, ECI analysis.
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