The regulation portion of the CPA exam is broken up into 5 components according to the AICPA blueprint.
(1) Ethics, Professional Responsibilities and Federal Tax Procedures.
(2) Federal Taxation of Property Transactions.
(3) Federal Taxation of Individuals.
(4) Federal Taxation of Entities.
(5) Business Law.
Like all CPA exam sections, a strategy should be in place when attacking regulation. Remember that although REG is a tax heavy exam, the conceptual components (e.g. ethics & business law) should not be disregarded. Often students find themselves disappointed with their 71% come score release day, and the first question I ask them is “how much did you study for business law?”
Studying for business law is an annoying task because although this section is not weighted very heavily compared to other sections (approximately 10-20% according to the AICPA), there is still a large volume of information that needs to be absorbed.
Yes, corporate and entity taxation is considered the “meat and potatoes” of this exam, but if you’re sitting in the 70-80% range, 10-12 points can go a long, long way. My plan of attack when studying for regulation is as follows:
(1) Individual Taxation – Go heavy on the mnemonics and create your own. Make sure to know the differences between adjustments and miscellaneous itemized deductions. In addition, make sure to know which individual credits are refundable and which are non-refundable.
(2) Entity and Corporate Taxation – Make sure to know the key differences between C-Corps, S-Corps and Partnerships. How to calculate basis, what are the differences between distributions and liquidations, and what are their respective taxable income items and deductions.
(3) Business Law – Read and do as many practice questions as possible.
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