Quick Review for CPA REG
This independent quick review is for candidates preparing for the AICPA U.S. CPA REG - Taxation and Regulation exam, code CPA REG. Use it as a fast review before topic drills, mixed question-bank sets, mock exams, and detailed explanations.
The goal is not to replace full study. The goal is to help you recognize the rule being tested, choose the correct order of analysis, avoid common traps, and convert missed practice questions into targeted review.
Current tax-year dollar amounts, phaseouts, thresholds, and effective dates can change. For CPA REG, know the rule structure and confirm any annual amounts against the current exam materials you are using.
High-Yield REG Map
| Area | Know cold | Common exam trap |
|---|
| Individual taxation | Gross income, exclusions, adjustments, itemized deductions, credits, filing status, dependents, capital gains/losses | Confusing AGI, taxable income, tax liability, and refund/payment |
| Property transactions | Basis, amount realized, recognized gain/loss, capital vs ordinary, depreciation recapture, like-kind exchanges, involuntary conversions | Calculating realized gain correctly but recognizing the wrong amount |
| Entity taxation | C corporations, S corporations, partnerships, LLC tax classification, basis, distributions, separately stated items | Forgetting basis limits and loss limitation ordering |
| Tax procedure | Authority, audits, statutes of limitation, penalties, refund claims, liens/levies, taxpayer rights | Assuming all IRS correspondence means the same procedural deadline |
| Ethics and professional responsibilities | Due diligence, preparer standards, client information, confidentiality, conflicts, tax return positions | Treating “client says so” as enough when facts look inconsistent |
| Business law | Contracts, agency, secured transactions, bankruptcy, commercial paper, debtor-creditor rights | Applying UCC rules to non-goods contracts, or common law rules to goods |
Do not jump straight to the answer choice. Classify the item first.
[
\text{Taxable income} =
\text{Gross income}
- \text{Exclusions}
- \text{Adjustments}
- \max(\text{Standard deduction}, \text{Itemized deductions})
- \text{Other allowable deductions}
]
Then:
[
\text{Tax due or refund} =
\text{Tax on taxable income}
- \text{Credits}
- \text{Payments and withholding}
]
Fast Classification Rules
| If the fact pattern asks… | First question to ask |
|---|
| “Is it taxable?” | Is it income under broad gross income rules, and is there a specific exclusion? |
| “Is it deductible?” | Is it personal, business, investment, capital, or specifically disallowed? |
| “What is the basis?” | How was the property acquired: purchase, gift, inheritance, exchange, contribution, distribution? |
| “Is gain recognized?” | Is there a nonrecognition rule, deferral rule, or partial recognition rule? |
| “Can the loss be used?” | Is it allowed, capital, passive, at-risk limited, basis limited, or personal and nondeductible? |
| “Who pays tax?” | Individual, C corporation, pass-through owner, estate/trust, donor, or recipient? |
Individual Taxation Quick Review
Filing Status and Dependents
| Topic | High-yield rule | Trap |
|---|
| Married filing jointly | Generally joint income, deductions, credits, and joint liability | One spouse’s tax issue can affect both unless relief applies |
| Married filing separately | Separate reporting; often reduced credit/deduction benefits | Not automatically better just because spouses have separate income |
| Head of household | Unmarried or considered unmarried, qualifying person, household maintenance | A dependent is not always a qualifying person for this status |
| Qualifying surviving spouse | Transitional favorable status after spouse’s death if requirements met | Not the same as head of household |
| Qualifying child | Relationship, age, residency, support, joint return tests | The test is generally whether the child provided over half of own support |
| Qualifying relative | Not a qualifying child, relationship/household, gross income test, support test | The taxpayer generally must provide over half of support |
Gross Income: Include Unless Excluded
| Usually included | Often excluded or partially excluded |
|---|
| Wages, bonuses, commissions | Gifts and inheritances received, though later income from the property is taxable |
| Business and self-employment income | Life insurance proceeds paid by reason of death, excluding interest |
| Interest, dividends, rents, royalties | Municipal bond interest for federal income tax purposes |
| Prizes, awards, gambling winnings | Qualified scholarships used for qualifying education costs |
| Unemployment compensation | Certain employer-provided health and fringe benefits |
| Taxable state/local refunds if prior tax benefit | Workers’ compensation and certain physical injury damages |
| Cancellation of debt income unless exception applies | Return of capital up to basis |
Adjustments, Deductions, and Credits
| Category | Examples | Exam focus |
|---|
| Adjustments to income | Certain retirement contributions, HSA deductions, student loan interest, self-employed health insurance, one-half self-employment tax | These reduce AGI |
| Itemized deductions | Medical expenses above the applicable floor, state/local taxes subject to limits, mortgage interest, charitable contributions, casualty losses when allowed | Compare total itemized deductions with standard deduction |
| Credits | Child/dependent-related credits, education credits, foreign tax credit, earned income credit where applicable | Credits reduce tax; deductions reduce income |
| Refundable credits | Can produce refund beyond tax liability | Do not treat all credits as refundable |
| Nonrefundable credits | Limited to tax liability | Excess may be lost or carried only if a rule allows |
Individual Tax Traps
- AGI vs taxable income: AGI comes before standard/itemized deductions.
- Exclusion vs deduction: An exclusion never enters gross income; a deduction reduces income after inclusion.
- Refundable vs nonrefundable credit: A nonrefundable credit cannot reduce regular tax below zero unless specific rules permit.
- Alimony: Treatment depends on the governing divorce or separation instrument and current-law rules.
- State tax refunds: Taxable only to the extent the taxpayer received a prior federal tax benefit.
- Capital losses: Individual capital losses offset capital gains, then a limited amount of ordinary income, with excess carried forward.
- Personal losses: Generally nondeductible unless a specific rule allows the deduction.
Property Transactions and Basis
Universal Gain/Loss Framework
\[
\text{Realized gain or loss} =
\text{Amount realized} - \text{Adjusted basis}
\]\[
\text{Recognized gain or loss} =
\text{Realized gain or loss allowed under the applicable tax rule}
\]
| Term | Meaning |
|---|
| Amount realized | Cash received + FMV of property received + liabilities relieved - selling expenses |
| Adjusted basis | Original basis + capital improvements - depreciation/amortization/depletion - returns of capital |
| Realized gain/loss | Economic gain or loss from the transaction |
| Recognized gain/loss | Taxable or deductible portion |
| Deferred gain/loss | Realized but not currently recognized due to a deferral rule |
Basis by Acquisition Method
| Acquisition | General basis rule | Common trap |
|---|
| Purchase | Cost, including capitalized acquisition costs | Repairs are usually expensed; improvements are capitalized |
| Gift | Carryover basis for gain; special dual-basis rule may apply for loss when FMV is lower than donor basis | Recipient does not use FMV automatically |
| Inheritance | Generally fair market value at valuation date, subject to special rules | Income in respect of a decedent may not receive a step-up |
| Conversion from personal to business use | Lower of adjusted basis or FMV at conversion for loss/depreciation purposes | Built-in personal loss is not converted into deductible business loss |
| Taxable exchange | FMV of property received | Do not use carryover basis unless a nonrecognition rule applies |
| Nontaxable exchange | Substitute or carryover basis, adjusted for boot and recognized gain | Basis preserves deferred gain |
Character of Gain or Loss
| Property type | Usual character | Exam focus |
|---|
| Personal-use asset | Capital gain; personal loss nondeductible | Sale of personal residence has special exclusion rules |
| Investment asset | Capital | Holding period matters |
| Inventory | Ordinary | Never capital asset to dealer |
| Depreciable business property | Section 1231/recapture framework | Depreciation can convert gain to ordinary income |
| Accounts receivable of cash-basis taxpayer | Ordinary | Basis often zero |
| Partnership/S corp interest | Generally capital, with ordinary treatment for certain “hot” items | Look for unrealized receivables or inventory |
Special Property Rules
| Rule | Core idea | Candidate mistake |
|---|
| Wash sale | Loss on stock/securities disallowed if substantially identical stock/securities are acquired within the wash-sale window; disallowed loss is added to basis | Applying wash-sale rules to gains |
| Related-party loss | Losses on certain related-party sales are disallowed | Assuming related-party gain is also disallowed |
| Like-kind exchange | Deferral generally for qualifying real property held for business/investment; gain recognized to extent of boot, loss not recognized | Treating personal property or personal-use real estate as qualifying |
| Involuntary conversion | Gain may be deferred if replacement property is acquired under the applicable rules | Forgetting basis is reduced by deferred gain |
| Installment sale | Gross profit percentage determines gain recognized as payments are collected | Depreciation recapture is generally recognized up front |
| Depreciation recapture | Prior depreciation can cause ordinary income treatment on disposition | Treating all Section 1231 gain as capital gain |
| Capital loss limits | Capital losses follow special offset and carryover rules | Deducting capital losses like ordinary business expenses |
Entity Taxation Quick Review
Entity Type Comparison
| Entity | Tax treatment | High-yield focus |
|---|
| Sole proprietorship | Not separate from owner for federal income tax | Schedule C income, self-employment tax, business deductions |
| C corporation | Separate taxable entity | Double taxation, E&P, corporate distributions, formation, liquidation |
| S corporation | Pass-through entity with eligibility restrictions | Shareholder basis, distributions, separately stated items, loss limits |
| Partnership | Pass-through entity | Outside basis, inside basis, liabilities, guaranteed payments, distributions |
| LLC | Tax classification depends on default rules/election | Single-member disregarded entity vs partnership vs corporate election |
C Corporations
| Topic | Rule to remember | Trap |
|---|
| Formation | Nonrecognition may apply when property is transferred to corporation by persons in control after exchange | Services are not property for this purpose |
| Shareholder basis | Generally transferred basis, adjusted for boot/gain | FMV is not always shareholder basis |
| Corporation basis | Carryover basis, often increased by gain recognized by transferor | Do not automatically use FMV |
| Liabilities assumed | Can affect gain recognition if liabilities exceed basis or have tax-avoidance purpose | Forgetting liability relief can be boot-like economically |
| Corporate income tax | Corporation pays tax on taxable income | Dividends are taxed again to shareholders |
| E&P | Determines dividend treatment of distributions | Taxable income and E&P are not identical |
| Nonliquidating cash distribution | Dividend to extent of E&P, then return of capital, then capital gain | Dividend treatment does not depend only on current-year profits |
| Property distribution | Corporation may recognize gain as if property sold; shareholder generally receives dividend amount based on value, subject to liability rules | Corporation generally does not recognize loss on nonliquidating property distribution |
| Liquidation | Corporation and shareholder both may recognize gain/loss | Liquidation is not treated like an ordinary dividend |
S Corporations
| Topic | Rule to remember | Trap |
|---|
| Eligibility | Domestic corporation with permitted shareholders and one class of stock | Debt can create issues if it functions like a second class of stock |
| Pass-through | Income, deductions, losses, and credits pass to shareholders | Separately stated items retain character |
| Basis increases | Contributions and income items | Tax-exempt income can increase basis |
| Basis decreases | Distributions, nondeductible expenses, losses/deductions | Apply ordering carefully |
| Loss use | Limited by basis, then at-risk and passive activity rules | A shareholder cannot deduct losses beyond allowable basis |
| Debt basis | Direct shareholder loans can create basis; corporate third-party debt generally does not | Guarantees alone are not usually enough |
| Distributions | Generally tax-free to extent of basis unless C corporation E&P complications apply | Negative stock basis is not allowed |
Partnerships
| Topic | Rule to remember | Trap |
|---|
| Formation | Generally nonrecognition for contribution of property to partnership | Contribution of services can create taxable compensation/income |
| Outside basis | Partner’s basis in partnership interest | Includes partner’s share of partnership liabilities |
| Inside basis | Partnership’s basis in its assets | Inside and outside basis can differ |
| Liabilities | Increases in share of liabilities increase outside basis; decreases are treated like distributions of cash | Liability shifts can trigger gain |
| Distributive share | Partners taxed on allocated income whether or not cash is distributed | Cash distributions are not the same as taxable income allocations |
| Guaranteed payments | Usually ordinary income to recipient and deductible by partnership if otherwise allowable | Not dependent on partnership income |
| Nonliquidating distributions | Generally nonrecognition; cash exceeding outside basis creates gain | Property basis cannot exceed remaining outside basis |
| Liquidating distributions | Basis is allocated to assets received under ordering rules | Do not create a loss unless specific requirements are met |
| Sale of partnership interest | Generally capital, but ordinary income for certain hot assets | Unrealized receivables and inventory matter |
Loss Limitation Order
A frequent REG mistake is applying passive activity rules before checking basis.
- Basis limitation — Does the taxpayer have enough tax basis?
- At-risk limitation — Is the taxpayer economically at risk?
- Passive activity limitation — Is the activity passive, and is there passive income?
- Excess business loss or other applicable limitation — Apply if relevant under current law.
C Corp vs S Corp vs Partnership Decision Table
| Question | C corporation | S corporation | Partnership |
|---|
| Is the entity taxed directly? | Yes | Usually no federal income tax at entity level | Usually no federal income tax at entity level |
| Do owners receive pass-through basis increases? | No for corporate income | Yes | Yes |
| Do liabilities increase owner basis? | Generally no | Generally no, except direct shareholder loans | Yes, partner’s share of liabilities |
| Are distributions often taxable? | Dividend to extent of E&P | Often tax-free to basis, subject to E&P rules | Usually tax-free to basis |
| Can losses pass to owners? | No | Yes, limited | Yes, limited |
| Are separately stated items important? | Less central to shareholder return | Yes | Yes |
Estates, Gifts, and Trust Basics
| Topic | Quick rule | Trap |
|---|
| Gift received | Generally excluded from recipient’s gross income | Income generated after the gift is taxable to recipient |
| Gift basis | Often carryover basis, with special loss basis rule if FMV is lower | Recipient does not receive automatic stepped-up basis |
| Gift tax | Generally imposed on donor, not donee | Do not treat every gift as taxable income to recipient |
| Inherited property | Generally basis is FMV at valuation date, subject to exceptions | Income in respect of a decedent has special treatment |
| Trust/estate income | Tax may be paid by trust/estate or beneficiary depending on distributions and DNI concepts | Distribution deduction is not unlimited |
Federal Tax Procedure
Tax Authority Hierarchy
| Authority | Weight in exam reasoning |
|---|
| Internal Revenue Code | Primary statutory authority |
| Treasury regulations | Strong authority; final and temporary regulations generally carry significant weight |
| Revenue rulings and revenue procedures | IRS administrative guidance; useful but below statute/regulations |
| Court decisions | Weight depends on court level and jurisdiction |
| Private letter rulings | Generally apply only to requesting taxpayer; useful for reasoning but not precedent |
| IRS publications/instructions | Helpful guidance but not primary authority |
Statutes of Limitation and Refund Claims
| Issue | General rule to remember |
|---|
| IRS assessment | Generally limited after a return is filed, subject to longer periods for substantial omissions and no limit for fraud/no return |
| Substantial omission | Longer assessment period can apply |
| Fraudulent return or no return | No normal limitation period |
| Refund claim | Generally tied to the later of a period from filing or from payment |
| Amended return | Does not automatically reset every limitation period |
Audit and Collection Concepts
| Concept | What to know |
|---|
| Correspondence audit | Narrow, document-driven audit by mail |
| Office/field audit | Broader factual development |
| Notice of deficiency | Key notice that allows petitioning Tax Court without first paying the deficiency |
| Refund suit | Generally requires payment first, then claim for refund, then suit if unresolved |
| Lien | Legal claim against taxpayer property |
| Levy | Actual seizure/collection action |
| Installment agreement | Payment over time |
| Offer in compromise | Settlement for less than full amount if requirements are met |
| Penalties | Accuracy-related, failure to file, failure to pay, fraud, preparer penalties, information-reporting penalties |
Ethics and Professional Responsibilities
Practitioner Standards
| Area | Practical rule |
|---|
| Due diligence | Make reasonable inquiries when information appears incomplete, inconsistent, or incorrect |
| Client-provided information | May generally rely on client information in good faith, but not blindly |
| Tax return positions | Must have appropriate support and must not be frivolous |
| Error discovery | Advise client promptly of error and potential consequences; practitioner usually cannot correct without client permission |
| Confidentiality | Do not disclose or use tax return information without consent unless an exception applies |
| Conflicts of interest | Identify, disclose, and obtain appropriate consent when representation is permitted |
| Contingent fees | Restricted in many tax return preparation contexts; know when they are prohibited or permitted |
| Written advice | Avoid unreasonable assumptions, reliance on incorrect facts, or advice designed to evade penalties |
| Preparer penalties | Can apply for unreasonable positions, willful/reckless conduct, or lack of due diligence |
Ethics Traps
- A CPA is not required to audit every client-provided tax number, but must question red flags.
- “The client insisted” is not a defense to an unsupported position.
- A return position can be nonfrivolous yet still fail a higher disclosure or penalty-avoidance standard.
- Confidentiality duties apply even when disclosure would make the CPA’s work easier.
- If a client refuses to correct a material error, consider withdrawal and professional obligations.
Business Law Quick Review
Contracts: Common Law vs UCC
| Issue | Common law | UCC sale of goods |
|---|
| Subject | Services, real estate, employment, non-goods | Goods |
| Acceptance | Mirror image rule more important | More flexible acceptance rules |
| Contract modification | Usually needs consideration | Good-faith modification may not need new consideration |
| Performance | Substantial performance often relevant | Perfect tender rule, subject to cure and exceptions |
| Warranties | Can arise, but UCC warranty rules are central for goods | Express, implied merchantability, implied fitness |
| Topic | Rule |
|---|
| Offer | Must show intent, definite terms, and communication |
| Acceptance | Must match required method or be reasonable if not specified |
| Consideration | Bargained-for legal detriment or benefit |
| Capacity | Minors and impaired parties may have avoidance rights |
| Legality | Illegal agreements generally unenforceable |
| Statute of frauds | Certain contracts must be in writing, including land, suretyship, contracts not performable within one year, and goods above UCC threshold |
| Parol evidence | Prior/contemporaneous outside evidence generally cannot contradict final integrated writing |
| Assignment | Transfer of rights; generally allowed unless materially changes obligor’s duty or prohibited |
| Delegation | Transfer of duties; not allowed for special personal performance or where prohibited |
| Remedies | Damages aim to protect expectation, reliance, restitution, or specific performance where appropriate |
Agency
| Concept | Quick rule | Trap |
|---|
| Actual authority | Principal expressly or impliedly grants authority | Implied authority can arise from role or circumstances |
| Apparent authority | Third party reasonably believes agent has authority due to principal’s manifestations | Agent alone cannot create apparent authority |
| Ratification | Principal later accepts unauthorized act with knowledge | Ratification is all-or-nothing for the transaction |
| Agent duties | Loyalty, care, obedience, accounting, notification | Secret profits breach duty of loyalty |
| Principal liability | Principal may be bound by authorized acts | Undisclosed principal rules can affect liability |
| Employee torts | Employer may be liable for acts within scope of employment | Independent contractor distinction matters |
Secured Transactions
| Step | Requirement | Exam focus |
|---|
| Attachment | Value given, debtor has rights in collateral, authenticated security agreement or possession/control | Attachment makes security interest enforceable against debtor |
| Perfection | Filing, possession, control, or automatic perfection depending on collateral | Perfection protects against third parties |
| Priority | Secured parties rank under priority rules | First to file or perfect often wins, subject to exceptions |
| PMSI | Purchase-money security interest can receive special priority | Timing and collateral type matter |
| Buyer in ordinary course | Can take free of certain security interests created by seller | Applies only under specific buyer/seller circumstances |
Bankruptcy
| Topic | High-yield rule |
|---|
| Automatic stay | Stops most collection actions once bankruptcy petition is filed |
| Bankruptcy estate | Includes debtor’s property interests, subject to exclusions/exemptions |
| Secured creditors | Have collateral rights; may receive adequate protection |
| Priority unsecured claims | Paid before general unsecured claims |
| General unsecured creditors | Often receive limited distribution |
| Discharge | Releases debtor from many debts, but not all |
| Preference | Certain pre-bankruptcy transfers to creditors can be avoided if statutory elements are met |
| Fraudulent transfer | Transfers made to hinder creditors or for inadequate value may be avoided |
| Chapter 7 | Liquidation |
| Chapter 11 | Reorganization, often business-focused |
| Chapter 13 | Individual repayment plan |
Negotiable Instruments and Commercial Paper
| Topic | Rule |
|---|
| Negotiability | Writing, signed, unconditional promise/order, fixed amount of money, payable to order/bearer, payable on demand or definite time, no improper extra undertakings |
| Holder | Possesses instrument with proper rights |
| Holder in due course | Takes for value, in good faith, without notice of problems |
| HDC protection | Takes free of many personal defenses |
| Real defenses | Still valid against holder in due course, such as forgery, fraud in the execution, material alteration, infancy where applicable, illegality, duress, incapacity, bankruptcy discharge |
| Transfer warranties | Can create liability even without indorsement liability |
| Indorser liability | Secondary liability if proper presentment, dishonor, and notice occur |
REG Calculation Checklist
Before selecting a numeric answer:
- Identify taxpayer type — individual, C corp, S corp shareholder, partner, estate/trust.
- Classify the item — income, exclusion, deduction, credit, basis adjustment, distribution, gain/loss.
- Apply ordering rules — especially for basis, distributions, losses, and capital gains/losses.
- Separate book and tax — financial accounting income is not taxable income.
- Check character — ordinary, capital, Section 1231, separately stated, passive, portfolio.
- Check limitations — basis, at-risk, passive, AGI floors, percentage limits, phaseouts.
- Check timing — cash vs accrual, installment method, deferral, carryover.
- Avoid negative basis — tax basis generally cannot go below zero.
- Use current-year amounts carefully — do not rely on old thresholds.
- Answer the question asked — tax liability, taxable income, deduction, basis, recognized gain, or amount realized.
Common Candidate Mistakes
| Mistake | Better approach |
|---|
| Memorizing isolated rules without order | Practice multi-step ordering: inclusion, deduction, limitation, character, timing |
| Treating every distribution as taxable income | First determine entity type, E&P, basis, and distribution ordering |
| Forgetting separately stated items | Pass-through items retain character for owners |
| Confusing partner debt basis with S shareholder debt basis | Partnership liabilities affect outside basis; S corp third-party debt generally does not |
| Recognizing all realized gains | Look for nonrecognition or deferral rules |
| Deducting personal expenses | Confirm business, investment, or specifically allowed personal deduction |
| Ignoring preparer ethics | REG often tests judgment, not just tax math |
| Applying UCC to service contracts | Determine whether goods dominate the transaction |
| Missing “except,” “least,” or “not” | Re-read the call of the question before calculating |
| Overusing annual dollar amounts | Learn the structure; verify current thresholds separately |
Fast Final Review Tables
Tax Treatment of Common Receipts
| Receipt | Likely treatment |
|---|
| Compensation for services | Taxable ordinary income |
| Gift received | Excluded from income, basis rules apply |
| Inheritance received | Excluded from income, basis rules apply |
| Interest on corporate bond | Taxable interest income |
| Municipal bond interest | Generally excluded federally |
| Qualified dividend | Taxable, potentially favorable rate |
| Return of capital | Reduces basis, then gain after basis reaches zero |
| Loan proceeds | Not income because of repayment obligation |
| Debt cancellation | Income unless exclusion/exception applies |
| Security deposit | Depends on facts; advance rent is generally income |
Business Deduction Decision Rules
| Expense | Usually deductible? | Watch for |
|---|
| Ordinary and necessary business expense | Yes | Capitalization, substantiation, public policy limits |
| Capital improvement | No immediate deduction; capitalize | Depreciation or basis recovery |
| Personal living expense | No | Specific exceptions only |
| Meals/entertainment | Limited or disallowed depending on type | Documentation and business purpose |
| Fines/penalties | Often disallowed | Compensatory vs punitive distinction |
| Bad debt | Depends on business/nonbusiness and worthlessness | Cash-basis receivables often have no basis |
| Interest | Depends on type and limitations | Personal interest generally disallowed |
| Charitable contribution | Subject to entity and percentage rules | C corp vs individual rules differ |
Entity Distribution Ordering
| Entity | Distribution logic |
|---|
| C corporation | Dividend to extent of E&P, then return of capital to basis, then capital gain |
| S corporation without C corp E&P issue | Generally reduces stock basis; excess is gain |
| Partnership | Cash reduces outside basis; cash over basis creates gain; property basis rules apply |
| Liquidating corporation | Shareholder generally recognizes gain/loss comparing amount received with stock basis |
| Liquidating partnership | Special basis allocation rules; loss only in limited circumstances |
How to Use This with a Question Bank
Use this page as a review companion, then move immediately into independent companion practice.
Recommended Practice Sequence
Start with topic drills
- Individual tax: income/deductions/credits.
- Property: basis and recognized gain/loss.
- Entities: C corp, S corp, partnership basis/distributions.
- Procedure/ethics.
- Business law.
Review detailed explanations
- For every miss, write the tested rule in one sentence.
- Identify whether the miss was a rule gap, ordering error, calculation error, or reading error.
Build mixed sets
- Mix tax and business law so you practice switching frameworks.
- Time yourself after accuracy improves.
Use mock exams for endurance
- Do not use mock exams only to get a score.
- Mine them for repeated weak areas.
Return to targeted topic drills
- If basis, distributions, or procedure questions keep repeating as misses, isolate them until the pattern is fixed.
Error Log Template
| Missed question topic | Error type | Correct rule | What to do next |
|---|
| Partnership distribution | Ordering error | Cash reduces basis; cash over basis creates gain | Drill 10 partnership basis questions |
| C corp property distribution | Rule gap | Corp can recognize gain on appreciated property distribution | Review E&P/distribution table |
| Statute of frauds | Classification error | Determine UCC goods vs common law first | Drill contracts questions |
| Tax preparer penalty | Ethics judgment | Client info can be relied on only if reasonable | Drill professional responsibility questions |
Practical Next Step
Review one section above, then complete a short set of original practice questions on that exact topic. Read the detailed explanations carefully, update your error log, and repeat with topic drills until the rule order feels automatic before moving to full mixed mock exams.