CPA REG Last-Minute Review: Tax and Law Essentials for Exam Week
A targeted final-week review guide for the CPA REG section. Refresh key tax rules, basis calculations, and business law concepts before your exam.
Your Final Week Before REG
REG covers an enormous amount of detailed tax law and business law material. Your final week should focus on ensuring that the most commonly tested rules are fresh and that you can execute multi-step calculations quickly and accurately. This is not the time to master new topics. It is the time to sharpen what you already know.
Days 7-5: Core Tax Review
Basis Calculations Across Entity Types
Review basis rules for each entity type side by side. For partnerships: initial basis equals cash plus adjusted basis of property contributed plus share of liabilities. For S corporations: initial basis equals cash plus adjusted basis of property contributed (no liability share unless directly loaned). For C corporations under Section 351: shareholder basis in stock equals adjusted basis of property transferred minus boot received plus gain recognized. Create a comparison chart and review it daily. Basis calculations appear in both multiple-choice and simulation formats.
Individual Tax Fundamentals
Review the structure of the individual tax return: gross income, adjustments to arrive at AGI, standard or itemized deductions, qualified business income deduction, taxable income, tax liability, credits, and payments. Refresh the major items in each category. For gross income, review the common inclusions (wages, interest, dividends, business income, capital gains) and exclusions (gifts, inheritances, life insurance proceeds, municipal bond interest). For itemized deductions, review medical expenses, state and local taxes (including the $10,000 SALT limitation), mortgage interest, and charitable contributions.
Property Transactions Framework
Review the gain or loss calculation (amount realized minus adjusted basis). Then review the characterization rules: is the asset a capital asset, Section 1231 property, or ordinary income property? Apply depreciation recapture under Sections 1245 and 1250 before Section 1231 netting. Review the capital loss limitation rules ($3,000 per year for individuals) and the Section 1231 lookback rule for net Section 1231 losses in the prior five years.
Days 4-3: Entity Comparison and Business Law
Entity Tax Comparison Quick Reference
- C Corporation: entity-level tax, dividends taxed again at shareholder level, no flow-through of losses, unlimited shareholders, one class of stock restriction does not apply
- S Corporation: no entity-level tax (generally), income and loss flow through to shareholders, 100-shareholder limit, one class of stock, must be domestic corporation
- Partnership: no entity-level tax, income and loss flow through, guaranteed payments deductible by partnership, special allocations permitted, liabilities increase basis
- Sole Proprietorship: no separate entity, Schedule C, self-employment tax on net earnings
Business Law Essentials
Review the elements of a valid contract (offer, acceptance, consideration, capacity, legality). Refresh the statute of frauds categories and the exceptions. Review agency law focusing on the types of authority and when a principal is liable for an agent's acts. Review the formation and liability characteristics of general partnerships, limited partnerships, LLCs, and corporations. For secured transactions, review attachment, perfection, and priority rules.
Circular 230 Key Points
Review the standards for tax return positions (reasonable basis for undisclosed positions, substantial authority for disclosed positions, more likely than not for tax shelters). Review the due diligence requirements and the rules for written tax advice. Know the sanctions available to the IRS Office of Professional Responsibility: censure, suspension, disbarment, and monetary penalties.
Days 2-1: Final Drills
Quick Calculation Practice
Work through 10 to 15 basis calculation problems covering partnerships, S corporations, and property transactions. Time yourself and aim for accuracy over speed. Review any errors immediately. These calculations are so common on the exam that fluency with them is essential.
Key Numbers to Remember
While the exam provides tax rate tables and some threshold amounts, certain numbers appear so frequently that knowing them saves time. Review the standard deduction amounts, the capital loss limitation, the Section 179 expensing limit, the SALT deduction cap, and the annual gift tax exclusion. These figures are not always provided in the exam materials.
REG rewards candidates who have systematic approaches to multi-step problems. In your final days, focus on process rather than panic. Review your approach to basis calculations, property transactions, and entity comparison questions, and trust the preparation you have done.
Practice What You Learned
Study with 1,200+ flashcards and 140 practice exams across all 4 CPA sections.