Study guide
1.4 Study Strategy and Task-Based Simulations
AICPA CPA Exam — Regulation REG
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1 Introduction & Exam Overview
1.1 Current Exam Facts 1.2 Format, Scoring, and Skill Levels 1.3 New Pronouncements and OBBBA Testing Policy 1.4 Study Strategy and Task-Based Simulations
2 Circular 230 and Tax Return Preparers
2.1 Practice Before the IRS under Circular 230 2.2 Diligence, Written Advice, Fees, and Records 2.3 Tax Return Preparer Identification and Penalties
3 Licensing, Audits, Appeals, and Disclosure
3.1 State Board Licensing and Disciplinary Systems 3.2 IRS Audits, Appeals, and the Judicial Process 3.3 Substantiation, Disclosure, and FBAR Reporting
4 Penalties, Hierarchy, and Legal Duties
4.1 Taxpayer Penalties 4.2 Tax Law Authoritative Hierarchy 4.3 Common Law Duties, Privilege, and Confidentiality
5 Agency Law
5.1 Authority of Agents and Principals 5.2 Duties and Liabilities of Agents and Principals
6 Contracts
6.1 Contract Formation 6.2 Performance and Discharge 6.3 Breach and Remedies
7 Debtor-Creditor Relationships
7.1 Suretyship, Guarantors, and Debtor-Creditor Rights 7.2 UCC Article 9 Attachment, Perfection, and Priority
8 Employment Taxes and Worker Classification
8.1 Federal Employment Taxes 8.2 Employee versus Independent Contractor
9 Bankruptcy, Health Plans, and FCPA
9.1 Bankruptcy Types and Discharge 9.2 Qualified Health Plans and the ACA 9.3 Foreign Corrupt Practices Act
10 Business Structure under State Law
10.1 Selection, Formation, Operation, and Termination 10.2 Rights, Duties, Obligations, and Authority of Owners and Management
11 Basis of Tangible Assets
11.1 Cost Basis and Conversion from Personal Use 11.2 Gift Basis under §1015 11.3 Inherited Basis under §1014
12 Wash Sales and Intangible Basis
12.1 Wash-Sale Basis Adjustments 12.2 Organization, Start-Up, and Loan Cost Basis
13 Cost Recovery
13.1 MACRS Recovery Periods and Conventions 13.2 Section 179 and Bonus Depreciation 13.3 Amortization of Intangibles
14 Individual Gross Income
14.1 Gross Income Inclusions 14.2 Gross Income Exclusions 14.3 Capital Gains, Holding Period, and Virtual Currency
15 Pass-Through Reporting, AGI, and Deductions
15.1 Reporting Items from Pass-Through Entities 15.2 Adjustments to Arrive at AGI 15.3 Standard versus Itemized Deductions 15.4 Qualified Business Income Deduction §199A
16 Loss Limitations and Filing Status
16.1 Capital Loss Netting and Ordinary Business Loss Limits 16.2 Hobby, Wash-Sale, and Personal-Use Loss Disallowance 16.3 Filing Status and Dependents
17 Tax Computation and Credits
17.1 Regular Tax and Net Investment Income Tax 17.2 Refundable and Nonrefundable Credits 17.3 Estimated Tax and Safe Harbors
18 C Corporations and Book-Tax Differences
18.1 Permanent vs Temporary Differences; Schedules M-1 and M-3 18.2 C Corporation Taxable Income and Special Deductions 18.3 C Corporation NOLs, Capital Losses, Credits, and Tax 18.4 State and Local Tax: Nexus, Allocation, Apportionment
19 S Corporations
19.1 Eligibility and Election 19.2 Ordinary Income, Separately Stated Items, and AAA 19.3 Shareholder Stock and Debt Basis
20 Partnerships, LLCs, and Tax-Exempt Organizations
20.1 Partnership Ordinary Income and Separately Stated Items 20.2 Partner's Outside Basis and Partnership Liabilities 20.3 LLC Tax Classification 20.4 Types of Tax-Exempt Organizations
1.4 Study Strategy and Task-Based Simulations
Key Takeaways Explain This Topic AI
Plan about 100–150 hours for REG and allocate that time to official Blueprint weights, with the largest blocks on Area IV (22–32%) and Area V (23–33%).
REG TBSs include research against IRC/Treasury excerpts, forms and schedules, and diagnostic/validation-check tasks that test source-data review.
Classify before you calculate: taxpayer, year, character, and limitation — then arithmetic.
REG tests routine and recurring compliance; TCP tests nonroutine planning. Do not study REG as if it were TCP.
Official free sources are the AICPA Blueprints PDF, Circular 230, and the SSTSs; sit timed four-hour mocks and drill both item types at /practice/cpa-reg.
Last updated: August 2026
Hours and official weights, not a generic calendar
A typical REG plan is 100–150 hours of directed work. That range is a candidate-planning figure, not an AICPA hour requirement. What is official is the Blueprint’s content-area ranges. Spend the 100–150 in proportion to those ranges, with extra tolerance for Areas IV and V because they are both the largest slices and the Application/Analysis slices.
Using range midpoints on a 125-hour midpoint plan (the center of 100–150) produces a defensible calendar. Recalculate if your CPR from a failed sitting tagged a specific area Weaker.
- Area Official range Midpoint Hours on a 125-hour plan
- I Ethics / professional responsibilities / federal tax procedures 10–20% 15% ~19
- II Business law 15–25% 20% ~25
- III Property transactions 5–15% 10% ~13
- IV Individuals 22–32% 27% ~34
- V Entities (including tax preparation) 23–33% 28% ~35
Areas IV and V together are about 55% of a midpoint mix. If your calendar gives them 40 hours combined and gives Area II 50 hours because contracts feel comfortable, you are studying the wrong exam. Area III is the smallest official range; it still feeds basis and cost-recovery TBSs and the OBBBA bonus/§179 illustrations in Section 1.3, so “5–15%” is not permission to skip MACRS conventions.
Area I and II hours should be Recall-plus-application , not flashcard-only. Circular 230 due diligence, preparer penalties, and UCC perfection are Remembering and Understanding and Application in the Blueprint’s representative tasks. Read the primary source once (Circular 230; a uniform-act summary for the business-law groups actually listed) and then spend the rest of those hours on items that force a conclusion in a fact pattern.
What a REG TBS actually is
Half the score is eight simulations. The 2026 Blueprint is explicit about three families you should practice on purpose:
Applied research. Tasks require reviewing and using excerpts of source materials — Internal Revenue Code and Treasury Regulations are the Blueprint’s examples — to identify issues, analyze facts, and determine the response. You are not hunting the entire Code. You are reading the excerpt in the exhibit, matching it to the facts, and discarding the attractive distractor that would be right under a different subsection.
Forms and schedules. Preparation and review of returns is in the section introduction. Expect to place amounts on the correct line or schedule, including pass-through items that must stay separately stated instead of hitting ordinary business income.
Diagnostic and validation-check tasks. The Blueprint’s technology language is not optional flavor. REG assesses verification of the completeness and accuracy of source data used to prepare returns and supporting schedules, and consideration of the outputs of automated validation checks and diagnostic tools that highlight potential errors or anomalies. A TBS that dumps a diagnostics pane is testing whether you can resolve the flagged mismatch, not whether you can ignore the pane and re-key from memory.
Those three families overlap. A single simulation can hand you a diagnostics output, an excerpt of §179, and a Form 4562-style grid. The scoring weight does not care that it felt like three tasks.
Classification before calculation
Most REG arithmetic errors are classification errors that happened first. Before you touch the on-screen calculator, lock four switches:
Taxpayer. Individual, C corp, S corp, partnership, disregarded LLC, tax-exempt, or a specified filing status (MFJ vs. single vs. HoH). The same cash amount is ordinary compensation on a 1040, a separately stated item on a K-1, or a non-deductible C corp distribution depending on who the taxpayer is.
Year. The Blueprint’s default is current year unless the item states otherwise. Installment timing, short years, and “acquired after January 19, 2025” bonus facts are year switches. Applying a 2025–2028 tip deduction to a stated 2024 year is a year error, not a math error.
Character. Ordinary, capital, §1231, separately stated, excluded, deferred, or nondeductible. Character decides the form, the limitation, and whether Area IV’s individual netting rules even apply.
Limitation. Basis, at-risk, passive activity, §179 remaining capacity, charitable or SALT caps, credit ordering, estimated-tax safe harbors. A perfectly multiplied deduction that then exceeds the limitation is a wrong answer.
Only after those four switches are set do you calculate. TBSs that feel “computational” are usually four classification calls plus one multiply. MCQs use the same order: a filing-status stem is a taxpayer switch; a wash-sale stem is a limitation switch.
REG vs. TCP — do not study the wrong exam
The Blueprint’s opening sentence is the Discipline split. REG tests recurring and routine federal tax compliance for individuals and entities, including the newly licensed CPA’s role in preparation and review of returns. TCP, the tax Discipline, is the nonroutine and planning overlay: more complex individual and entity planning that is not the Core’s day-to-day compliance engine. Multi-year entity-restructuring outlines and other nonroutine planning tasks sit on the TCP side of that line unless the REG Blueprint’s own representative tasks include them.
If you chose TCP as your Discipline, still pass REG as REG. Do not skip Area II business law because TCP is your tax Discipline — Area II is Core. Do not skip REG research TBSs on the theory that research lives only on TCP. Applied research with Code and regulation excerpts is a REG skill.
Official free sources, then timed mocks
Three primary sources are free and Blueprint-aligned:
AICPA Uniform CPA Examination Blueprints (effective January 1, 2026), including the REG section introduction, skill table, area weights, representative tasks, and the Policy on New Pronouncements / H.R. 1 memo linked from the same AICPA page.
Treasury Department Circular No. 230 , Regulations Governing Practice before the Internal Revenue Service — the Area I reference the Blueprint names.
AICPA Statements on Standards for Tax Services (SSTSs) , revised effective January 1, 2024 — enforceable tax-practice standards for AICPA members, used alongside Circular 230 rather than instead of it.
Add the AICPA sample test for software mechanics (spreadsheet that is similar-but-not-Excel, exhibit highlighting, testlet navigation). Then sit timed four-hour mocks that use all five testlets in order, including the decision to take or decline the 15-minute post-testlet-3 break. An untimed question bank that you complete in 20-minute bursts does not train the 50% TBS half of the score under a running clock.
Practice both item types, including research and diagnostics-style work, at /practice/cpa-reg . Use a failed sitting’s Candidate Performance Report to reweight the next 100 hours toward Weaker areas instead of replaying the areas that already scored Stronger against the 75–80 band.