CPA REG notes · Taxation and Regulation

Federal tax for individuals and entities, tax procedure, ethics and business law. Updated for OBBBA. The exam is 4 hours with 72 multiple choice questions and 8 task-based simulations.

Blueprint areas

Area I. Ethics, Professional Responsibilities and Federal Tax Procedures
Area II. Business Law
Area III. Federal Taxation of Property Transactions
Area IV. Federal Taxation of Individuals
Area V. Federal Taxation of Entities including Tax Preparation

Chapters

Circular 230 and tax return preparers. Who may practice before the IRS; duties, restrictions and fees; written advice; sanctions; who is a tax return preparer; preparer penalties
Licensing and disciplinary systems. Role and authority of state boards of accountancy; obtaining and keeping the license; mobility; discipline by boards, the AICPA, the SEC and the PCAOB
Federal tax procedures and taxpayer penalties. Audits and appeals; the courts; disclosure of return positions; foreign account reporting; substantiation; taxpayer penalties; the hierarchy of tax authority
Legal duties and responsibilities. Common law liability to clients and third parties; negligence and fraud; privileged communications; confidentiality and privacy rules
Agency. Actual and apparent authority; whether an agency exists; ratification; duties and liabilities of agents and principals; termination
Contracts. Formation; types of contracts; common law and UCC sales; performance and discharge; breach and remedies
Debtor-creditor relationships. Rights and duties of debtors, creditors and guarantors; secured transactions and perfection; bankruptcy and distribution of the estate
Federal laws and regulations of business. Employment taxes; worker classification; Affordable Care Act mandates and premium tax credits; types of bankruptcy and discharge; Foreign Corrupt Practices Act
Business structure. Forming, running and ending each entity type; legal characteristics; rights, duties and authority of owners and managers
Basis of assets. Purchased business assets; personal use converted to business; gifts and inheritances; wash sales; organization, start-up and loan costs
Cost recovery. MACRS recovery periods and conventions; Section 179 and bonus depreciation after OBBBA; listed property; amortization of intangibles; reviewing depreciation schedules
Gross income: inclusions and exclusions. Wages, interest, dividends, guaranteed payments, fringe benefits, retirement income, damages; capital gains including digital assets; exclusions; a decedent's final return
Items from pass-through entities. Schedule C and E; reporting Schedule K-1 ordinary income and separately stated items on the individual return; disregarded entities
Adjustments and deductions. Adjustments to reach AGI; standard and itemized deductions; OBBBA deductions for tips, overtime, seniors and car loan interest; the QBI deduction
Loss limitations. Capital loss netting and carryforwards; basis, at-risk, passive and excess business loss limits; hobby losses, wash sales and personal-use assets
Filing status and dependents. The five filing statuses; qualifying child and qualifying relative
Computation of tax and credits. Tax liability, NIIT and the additional Medicare tax; refundable and nonrefundable credits; estimated tax safe harbors
Book and tax differences. Permanent and temporary differences; Schedules M-1 and M-3; reviewing a trial balance for differences
C corporations. Formation; taxable income; dividends received deduction; net operating and capital losses; credits; E&P and distributions; nexus, allocation and apportionment
S corporations. Eligibility and election; termination; ordinary income and separately stated items; AAA; stock and debt basis
Partnerships. Formation; ordinary income and separately stated items; guaranteed payments; partner's basis including liabilities; distributions
Limited liability companies. Tax classification choices for an LLC; check-the-box defaults and elections; members' self-employment tax
Tax-exempt organizations. Types of tax-exempt organization; public charities and private foundations; unrelated business income; annual returns
IRS forms workshop. Form 1040 and its schedules; Forms 1120, 1120-S and 1065 with K-1s; Forms 4562 and 4797; disclosure, due diligence and foreign account forms