Area I of the REG section blueprint covers the following:
• Ethics and Responsibilities in Tax Practice — Requirements based on Treasury Department Circular 230 and the rules and regulations for tax return preparers.
• Licensing and Disciplinary Systems — Requirements of state boards of accountancy to obtain and maintain the CPA license.
• Federal Tax Procedures – Understanding federal tax processes and procedures, including audits and appeals, appropriate disclosures, substantiation, penalties and authoritative hierarchy.
• Legal Duties and Responsibilities – Understanding legal issues that affect the CPA and their practice
Area II of the REG section blueprint covers several business law concepts focused on the legal implications of business transactions and issues as they relate to accounting, auditing and financial reporting. The Area includes the following:
• Government regulation of business, specifically employment taxes, worker classification laws, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the Foreign Corrupt Practices Act of 1977 and the Patient Protection and Affordable Care Act.
• Areas of agency, contracts, debtor-creditor relationships and business structure. – The Uniform Commercial Code under the topics of contracts and debtor-creditor relationships. – Legal aspects of business entity selection, formation, operation and termination.
Area III of the REG section blueprint covers federal tax compliance related to routine and recurring property transactions for individuals and entities. The Area includes the following:
• Basis of an asset purchased for use in a trade or business, and the related depreciation of the asset.
• Basis of an asset converted from personal to business use, and the related depreciation of the asset.
• Basis of assets held by individuals.
• Basis of intangible assets.
• Cost recovery (depreciation and amortization) of assets held for use in a trade or business
Area IV of the REG section blueprint covers federal tax compliance related to routine and recurring transactions and issues for individuals. The Area includes the following:
• Inclusion and exclusion of amounts for purposes of calculating gross income, adjusted gross income and taxable income.
• Reporting of income from pass-through entities, including the proper handling of items on an individual’s tax return.
• Loss limitations, filing statuses available to a taxpayer, the role of tax credits and safe harbor requirements for estimated taxes.
Area V of the REG section blueprint covers federal tax compliance related to routine and recurring transactions and issues for entities. The Area includes the following:
• Required adjustments to book income to determine taxable income.
• Computation of taxable income for C corporations, including state and local tax issues, and allowable tax credits.
• Determination of ordinary business income (loss) and separately stated items for S corporations and partnerships, and the impact of current year transactions on the owner’s basis in the entity.
• Classification options for limited liability companies, eligibility and election of S corporation status and types of tax-exempt organizations.
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