The complete guide to the REG CPA Exam

If you’re planning on taking the CPA Exam, or you’ve already passed other sections, you’ll need to prepare for Taxation and Regulation (REG). To help you know exactly what to expect and how to get Exam Day Ready^SM, Becker created this comprehensive guide to the REG CPA Exam.  

Summary  

The REG CPA Exam assesses your skill and knowledge related to U.S. federal taxation, including ethics and professional responsibilities, business law, and compliance for individuals and entities. The REG exam includes both multiple-choice questions and task-based simulations that test across skill levels, including recall, application, and analysis. While it’s not as expansive as other sections, the complexity of topics requires intensive study and focus. 

Table of contents: 

1. What is the REG CPA Exam? 
2. The REG CPA Exam format 
3. How is REG scored? 
4. Is the REG CPA Exam hard? 
5. Tips to pass REG 

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What is the REG CPA Exam? 
 

The REG CPA Exam is the Taxation and Regulation exam, a Core section of the CPA Exam which assesses a candidate’s skills related to tax practice. You’ll be tested on ethics and professional responsibilities related to tax practice, U.S. business law and U.S. federal tax compliance for individuals and entities with a focus on recurring and routine transactions. 

Recent changes to REG 

In January 2024, CPA Evolution went into effect. This is an updated CPA Exam that requires all candidates to pass three Core sections of the CPA Exam which focus on the foundational knowledge all CPAs should possess.  

Core sections: 

• Audit and Attestation (AUD)  
• Financial Accounting and Reporting (FAR)  
• Taxation and Regulation (REG)  

Also, all candidates must choose and pass one of three CPA Exam Discipline sections. These assess your knowledge on more complex topics in a specific area. Each one builds on one of the Core sections to ensure specialized knowledge in a specific area.   

Discipline sections:

• Business Analysis and Reporting (BAR) builds on FAR  
• Information Systems and Controls (ISC) builds on AUD  
• Tax Compliance and Planning (TCP) builds on REG  

REG tests your knowledge on the foundational information related to U.S. taxation and tax practice. If you would like to specialize in tax, TCP builds on the REG CPA Exam by focusing on more advanced topics.  

REG CPA Exam format 

The REG CPA Exam is a four-hour exam comprised of 72 multiple-choice questions (MCQs) and eight task-based simulations (TBSs). The questions and simulations are split up into a total of five exam sections called “testlets.” 

• Pre-exam: Complete the welcome screen to confirm your information and add your "launch" code then your confidentiality code. You'll have five minutes for each screen.   
• Testlet 1: 36 MCQs  
• Testlet 2: 36 MCQs  
• Testlet 3: Two TBSs  15-minute break that does not count toward your exam time  
• Testlet 4: Three TBSs  
• Testlet 5: Three TBSs 

REG content areas

Ethics, Professional Responsibilities and Federal Tax Procedures covers these specific topics:

• Ethics and responsibilities in tax practice 
• Licensing and disciplinary systems 
• Federal tax procedures 
• Legal duties and responsibilities 

Business Law content relates to the legal implications of business transactions and issues as they relate to accounting, financial reporting and auditing. Specific topics include: 

• Government regulation of business, such as employment tax, bankruptcy and anti-bribery
• Areas of agency 
• Contracts 
• Debtor-creditor relationships 
• Business structure 

Federal Taxation of Property Transactions assesses knowledge of federal tax compliance related to routine and recurring property transactions for individuals and entities. This content area includes: 

• Basis of assets 
• Cost recovery (depreciation and amortization) of assets 

Federal Taxation of Individuals assesses knowledge of federal tax compliance related to routine and recurring transactions and issues for individuals. Topics include: 

• Inclusion and exclusions related to calculating gross income, adjusted gross income and taxable income 
• Reporting items income from pass-through entities 
• Loss limitations 
• Filing status 
• Tax credits and safe harbor requirements for estimated taxes 

Federal Taxation of Entities assesses knowledge of federal tax compliance related to routine and recurring transactions and issues for entities. Specific topics within this content area include: 

• Adjusting book income to determine taxable income 
• Computing taxable income for C corporations 
• Determining loss and separately stated items for S corporations and partnerships 
• Limited liability companies 
• Types of tax-exempt organizations 

It’s important to note that you should assume the information provided in both MCQs and TBSs is relevant, and you should apply all stated assumptions. Also, you should assume that transactions or events referenced in the question occur this year and you should apply the most recent provisions of the tax law. You won’t have to know specific tax rate percentages, or amounts or limitations indexed to inflations for the REG CPA Exam.

REG skill levels

All MCQs and TBSs on the REG Exam will fall under one of three "skill levels."   

How is REG scored? 

The AICPA grades REG on a scale from 0 to 99, and you need to score at least a 75. Questions on the REG CPA Exam are weighted based on difficulty, so harder questions count for more than easier questions. Also, you can earn partial credit on TBSs because you are asked multiple questions within each scenario. The 72 MCQs make up 50 percent of the weighted score, while eight TBSs make up the other 50 percent of your score.   

Once your exam is graded and the weights are applied, you receive an aggregate score based on the 0 to 99 scale.  

Is the REG CPA Exam hard? 

Most CPA candidates find it hard, but it’s far from impossible. In fact, when you look at the most recent CPA Exam pass rates, the REG CPA Exam had the highest pass rate of 61 percent. This pass rate does reflect the “old” CPA Exam, before it was updated in January 2024. However, when the scores for CPA Evolution are released, we will have a better idea of whether it’s more difficult, easier, or about the same. 

Most CPA candidates find that what makes REG hard is the focus on complicated tax and business law rather than areas of accounting they may be more comfortable and familiar with. Also, with 72 MCQs and eight TBSs, you’ll need to have a strong grasp of the material so you can work efficiently on the exam.

How long should I study for REG?

Becker recommends spending about 80 to 100 hours studying for REG. However, this is a general recommendation – you may find that you’ll need to devote more time to this section depending on how well you can remember, apply, and analyze the information covered. When making your study plan, make sure to build time in for practice tests that help you determine areas of content where you’re proficient and where you may need to focus more study time and effort.

When should I take REG in the CPA Exam?

Determining the best order to take the CPA Exam depends on which Discipline you choose. We typically recommend taking the FAR CPA Exam first, as this contains foundational information in financial accounting which will help you on your other exams. 

Tips to pass the REG CPA Exam 

Now that you know what to expect on the REG CPA Exam, we want to share some tips to help you get Exam Day Ready^SM and pass on the first try!

Know taxation

Up to 75 percent of the REG Exam content is going to focus on federal taxation of property, individuals, or entities. Taking the time to make sure you can remember, apply, and analyze federal taxation laws will play a big role toward passing.

Don’t skip ethics

While taxation takes up a majority of the space on the exam, earning at least a 75 on the REG CPA Exam means you have to know ethics and responsibilities. Be sure to study the ethics and responsibilities requirements based on Treasury Department Circular 230, the legal issues that affect CPAs and state requirements for getting and keeping your CPA license.

Give yourself time to study 

Don't feel like you need to rush REG before you're ready. You should give yourself at least 80 hours of study time to learn the exam content and learn how to apply it to a wide variety of scenarios.   

Becker's CPA Exam review includes a study planner to map out your schedule based on your exam date and how many hours a week you want to study. With topics broken down by weeks and building in time for practice tests and simulated exams, you can stay on track more easily.   

Use practice tests to find areas of opportunities 

Make sure you're taking practice tests to ensure you understand and retain everything you're studying. Both MCQs and TBSs highlight areas of proficiency, but they also show areas of opportunity where you can focus more of your time and use your study time more wisely.  

 Becker's Adapt2U technology builds personalized practice tests so you can focus on areas of opportunity and overcome challenging concepts more effectively.  

Manage your time 

With four hours to complete 72 MCQs and 8 TBSs, managing your time is essential to passing the REG CPA Exam. Fortunately, there aren’t as many calculations required, especially compared to FAR, and more of the questions are devoted to remembering and understanding information. 

When you're practicing, try to give yourself between 60 and 90 seconds per MCQ and about 15 to 20 minutes for each TBS. When you're sitting for the exam, this will give you a bit of extra time to go back and work on questions that may have stumped you the first time around.   Our expert teams created Becker's simulated exams based on the AICPA blueprint to closely align with the exam's question volume, weighting, and skill level. Not only will this show you where you need more preparation and review, it will help you get a feel for time constraints before the exam.  

Pass the REG CPA Exam with Becker 

Our CPA Exam review includes the resources and materials to get you Exam Day ReadySM, from live-streaming classes and bite-size lecture videos to personalized practice tests, flashcards, and even a mobile app to study on the go. We know the REG CPA Exam is challenging, but with Becker, you can rise to the challenge and pass with confidence.   

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