The REG Section: Two Subjects in One

The Regulation section covers federal taxation and business law together. Federal taxation represents approximately 62 to 76 percent of REG. Business law and ethics account for the remainder. Candidates who manage this dual focus effectively are the ones who pass.

Individual Income Taxation

You need to calculate adjusted gross income, understand above-the-line and below-the-line deductions, apply the standard and itemised deduction rules, and compute tax liability including self-employment tax and AMT. The areas that trip candidates up most are the passive activity loss rules, the capital gain netting rules, and the at-risk rules for partnerships and S corporations.

Entity Taxation: The Comparison Framework

Build a comparison table of how C corporations, S corporations, partnerships, and sole proprietorships are treated differently — how income is taxed, how losses flow through, how distributions are taxed. Pay special attention to basis rules — a partner's outside basis is frequently tested and commonly misunderstood.

Business Law: A Different Kind of Thinking

Business law questions require identifying the applicable legal rule and determining how it applies to specific facts. Focus on contracts, agency relationships, corporate law, and bankruptcy.

REG time management tip: Tax calculations can be time-consuming. Flag complex calculation questions and return to them — do not let one question consume time needed for several easier ones.

Practice REG questions across tax and business law

PrepQBank's REG questions cover individual taxation, entity taxation, and business law with detailed explanations for every answer.

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