Section 1: 30–40%T1

Advanced Individual Income Tax Computations

Exam insight

TCP asks you to build a full individual tax bill from many moving parts, then plan around it. You need to stack ordinary income, capital gains, NIIT, additional Medicare tax, self-employment tax, and AMT in the right order, then look across years to manage brackets.

What AICPA wants you to know

1Layer ordinary income and capital gains using the capital-gain stacking rules to find the correct 0/15/20 percent rate.
2Compute the 3.8 percent net investment income tax and the 0.9 percent additional Medicare tax using the correct MAGI and wage thresholds.
3Calculate self-employment tax and the related deductions, including the one-half SE tax deduction.
4Work the alternative minimum tax (AMT) computation, adding back common preferences and applying the 2025 exemption and phaseout.
5Apply multi-year projection techniques: bracket management, timing of income and deductions, and gain/loss harvesting.

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Surtax and AMT StackBuild the individual bill in layers: stack ordinary then gains, take NIIT on the lesser-of, and owe AMT only when tentative minimum tax tops regular tax.The Disposition PlanNet first, then character: a 1231 net gain is capital and a net loss ordinary, 1245 recaptures depreciation, and 1031 and 121 defer or exclude.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.