You can simplify the formula. Because all months will <= 12 and all days will be <= 31, you don't have to check for that. So, changing your formula to this will work and will decrease the amount of processing required:
if (IsNull({Equipment.CreatedOn}) Or Year({Equipment.CreatedOn}) <= {?Year})
AND
Not ({Equipment.Inactive} and (IsNull({Equipment.RetireDate}) Or Year({Equipment.RetireDate}) <= {?Year}))
then 1
else 0
-Dell