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Core · REG

Taxation and Regulation

REG covers ethics/tax procedures, business law, property transactions, individual taxation, and entity taxation. It is calculation-heavy and rule-heavy — and pairs naturally with the TCP discipline.

45 flashcards15 MCQs3 high-yield notes

Time

4 hours

MCQs / TBS

72 / 8

Score weight

50% MCQ · 50% TBS

2025 pass rate

63.12%

Why it trips people up

Details change outcomes (basis, character, entity type). Candidates confuse individual vs entity rules and burn time on tax simulations.

Application-heavy with solid Analysis. Remembering/Understanding still matters for ethics and business law.

Typical study load: ~90–130 hours · Pairs well with TCP

Common traps

  • Memorizing rates instead of transaction mechanics
  • Weak basis tracking (especially partnerships & S-corps)
  • Skipping property transactions (like-kind, wash sales, capital vs ordinary)
  • Under-practicing tax sims with source documents

How to study REG

  1. 1

    Build a basis / gain-loss / character flowchart and practice it until automatic.

  2. 2

    Compare C-corp, S-corp, partnership, and individual rules side-by-side weekly.

  3. 3

    Do not ignore business law — contracts, agency, and debtor-creditor show up.

  4. 4

    You are generally not tested on inflation-indexed dollar amounts; focus on mechanics.

  5. 5

    If choosing TCP, schedule REG then TCP in the same study season.

Blueprint content areas

Weights are AICPA blueprint ranges. Use them to prioritize — do not ignore low-weight areas entirely, but spend more reps where the exam spends more score.

Area I — Ethics, Professional Responsibilities & Federal Tax Procedures

10–20%
  • • Ethics & responsibilities in tax practice
  • • Licensing & disciplinary systems
  • • Federal tax procedures
  • • Legal duties & responsibilities

Area II — Business Law

15–25%
  • • Agency
  • • Contracts
  • • Debtor-creditor relationships
  • • Government regulation of business
  • • Business structure

Area III — Federal Taxation of Property Transactions

5–15%
  • • Basis & holding period
  • • Taxable & nontaxable dispositions
  • • Related party transactions
  • • Cost recovery (depreciation / amort / depletion)

Area IV — Federal Taxation of Individuals

22–32%
  • • Gross income
  • • Deductions & credits
  • • Filing status & dependents
  • • Computation of tax & estimated taxes
  • • Alternative minimum tax concepts

Area V — Federal Taxation of Entities

23–33%
  • • C corporations
  • • S corporations
  • • Partnerships
  • • Trusts & tax-exempt organizations
  • • Tax return preparation issues

REG high-yield notes

Study these, then drill the REG flashcards and MCQs.

REG · High-yield

Basis is the REG battlefield

Gift, inheritance, partnership, and S-corp basis rules decide whether losses are usable and whether distributions are taxable.

  • Gift: carryover basis (dual basis for loss property).
  • Inheritance: FMV (step-up/down).
  • Partnership: contributions + income − distributions − losses ± liabilities.
  • S corp: similar flow-through tracking; losses limited to stock/debt basis.
  • Always apply basis / at-risk / passive in the right order.

Exam tip: Draw a T-account for basis on every entity distribution/loss question.

REG · High-yield

Property dispositions checklist

Amount realized − adjusted basis = realized gain/loss; then character and deferral provisions decide recognition.

  • Compute realized first, recognized second.
  • §1231 netting and depreciation recapture change character.
  • §1031 (realty), §1033 (involuntary), installment method can defer.
  • Wash sales and related-party rules disallow or defer losses.
  • Boot triggers gain in deferral transactions.

Exam tip: Character questions: identify asset type + holding period + recapture before picking the rate/treatment.

REG · High-yield

Entity comparison snapshot

C vs S vs partnership questions are won by knowing where tax is paid and how basis/liability rules work.

  • C corp: entity tax + dividend double tax risk.
  • S corp: flow-through with eligibility and one-class-of-stock rules.
  • Partnership: flexible allocations; liabilities increase basis.
  • §351/§721 deferral on formation when requirements met.
  • Hot assets (§751) can ordinary-ize partnership interest sale gain.

Exam tip: If liabilities are in the facts, you are probably in partnership basis land.

Drill REG flashcardsREG MCQ drillsAll notes