CPA TCP: Entity formation, liquidation and tax planning
Blueprint III.A–III.D · Area III, Entity Tax Planning · 10–20% of TCP
Ten TCP questions on entity formation, liquidation and tax planning, untimed, with a reason for every answer option.
Or take the full TCP mock examWhich planning feature is available to a partnership but not to an S corporation?
Entity formation, liquidation and tax planning on CPA TCP
Area III of TCP (10–20%) covers entity tax planning: forming and liquidating entities, and planning for C corporations, S corporations and partnerships, including the choice of entity.
- Blueprint groups
- III.A–III.D
- Share of the section
- Area III, Entity Tax Planning: 10–20%
- Our drill
- 10 questions from 12 on this topic, untimed, with a reason for every option; one free attempt, unlimited with a pass
What to know
- §351 requires transferors to control 80% of voting power and each class of stock after the exchange; boot triggers gain up to the realized gain, and liabilities over basis trigger gain under §357(c).
- In a §351 transfer of built-in-loss property, the corporation's basis is limited to fair value unless the transferor elects to reduce stock basis (IRC §362(e)(2)).
- A liquidating C corporation recognizes gain as if it sold its property at fair value (IRC §336); a parent owning 80% recognizes no gain on liquidating a subsidiary (IRC §332).
- Partnerships may make special allocations with substantial economic effect; S corporations allocate pro rata.
- Converting C corporations face the five-year built-in gains tax and LIFO recapture (IRC §§1374, 1363(d)).
- §1244 stock losses are ordinary up to $50,000 a year ($100,000 on a joint return).
Test yourself on entity formation, liquidation and tax planning
Ten TCP questions on entity formation, liquidation and tax planning, untimed, with a reason for every answer option.
Or take the full TCP mock examCommon questions
How much of the TCP section is entity formation, liquidation and tax planning?
It sits in Blueprint Area III (III.A–III.D). The AICPA weights whole areas, not single topics; see the area’s range on the TCP page. Our 68-question mock draws each area at the middle of its range.
Are these real TCP questions?
No. The AICPA does not release live exam questions. These are original practice questions written to the published 2027 CPA Exam Blueprints, with a reason for every answer option and the standard or code section behind the key.
More TCP topics
- Individual compliance, estimated taxes and passive lossesdrill
- Gift tax and personal financial planningdrill
- C corporation compliancedrill
- S corporation, partnership, trust and exempt organization compliancedrill
- Property dispositions, related parties and imputed interestdrill
TCP full mock exam: 4 hours, 5 testletsTCP task-based simulations
Blueprint and exam facts checked November 2026: AICPA: Learn what is tested on the CPA Exam (Blueprints effective January 1, 2027) · AICPA: CPA Exam score release and testing windows · NASBA: CPA Exam FAQ · Virginia Board of Accountancy: CPA Exam fees.
Original independent practice questions written to the AICPA CPA Exam Blueprints. Not affiliated with or endorsed by the AICPA or NASBA.