IRS Enrolled Agent Part 1 Course Notes

Start every individual return with facts, filing status, dependency, filing requirement, residency, prior-year carryovers, and a complete income/adjustment/deduction/credit/payment inventory. For the 2026 SEE cycle, questions are based on federal tax law through December 31, 2025, so 2025-return rules and 2025 statutory changes matter. Prior returns are evidence, not authority: verify the current-year facts.

• Treating a prior return as proof that the same treatment is correct this year.

• Start with the taxpayer facts before touching the numbers.

Gross income is broad: include income unless a Code provision excludes it. For investments and property, first determine basis and amount realized, then gain/loss, then character, then any limitation or deferral rule. Retirement distributions require account type, basis, age, holding-period, rollover, and beneficiary facts. Pass-through items keep their character and may be limited by basis, at-risk, passive-activity, or other rules.

• Including IRA earnings in basis.

• Income question: INCLUDE unless you can identify the exclusion.

Deductions reduce income; credits reduce tax. For 2025 returns, candidates must know both long-standing Schedule A/credit rules and major 2025 changes, including the higher standard deduction, higher SALT cap, Schedule 1-A deductions, and increased Child Tax Credit. Always identify whether a benefit is above-the-line, itemized, additional deduction, nonrefundable credit, or refundable credit before calculating it.

• Treating 7.5% of AGI as the deductible medical amount instead of the floor.

• First classify the tax benefit: adjustment/additional deduction/itemized deduction/credit.

Part 1 taxation questions commonly test which additional tax applies and whether the taxpayer paid enough during the year. Distinguish regular income tax from self-employment tax, NIIT, Additional Medicare Tax, AMT, and retirement-related additional taxes. For estimated-tax penalties, determine required annual payment, payment timing, safe harbors, and whether an exception applies.

• Equating self-employment tax with ordinary income tax.

• Identify the income base before the tax name.

Advising questions ask for the legally correct option that best fits the taxpayer’s future facts, not merely the smallest current-year number. Compare timing, character, basis, cash flow, carryovers, penalties, filing status, retirement rules, and refund-claim statutes. State assumptions and avoid strategies that depend on omitting reportable income or ignoring documentation.

• Choosing an answer only because it lowers current-year tax.

• Advice = LEGAL + FACT-BASED + FORWARD-LOOKING.

Specialized individual-return questions require matching the event to the correct return or information filing. Death can require a final Form 1040, Form 1041 for post-death estate/trust income, and sometimes Form 706 for estate tax. Lifetime gifts can require Form 709 even when no gift tax is currently payable. Foreign-asset reporting requires separate Form 8938 and FBAR analyses; one does not replace the other.

• Confusing Form 1041 estate income tax with Form 706 estate tax.

• Death question: WHEN was income earned/received and WHO received it?