How I Passed the REG Exam with a 91 | Kyle Ashcraft, CPA
Passing the REG exam isn't about memorizing every single number in the tax code; it's about understanding the mechanics of how those numbers move.
Back in 2019, I passed REG with a score of 91 (alongside a 98 on BEC, 95 on FAR, and 90 on AUD). I launched Maxwell CPA Review to share exactly how I did it.
In this guide, I'm breaking down the high-level topics you need to master and the specific study routine that took me from "overwhelmed" to a 90+ score.
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Get My Free CPA 101 CourseMy Study Approach: The 140-Hour Rule
I studied for REG over the course of seven to eight weeks while working a full-time job. While most sources recommend about 110 hours of study for REG, I put in 140 hours to ensure I had the nuances down.
My schedule was strict but effective:
- Monday-Friday: 2.5 hours each night focusing strictly on new content. Watch the lectures, take notes, and create your summary outlines.
- Saturday-Sunday: 5 hours each day dedicated to review and practice. This is where you do as many Multiple Choice Questions (MCQs) and Task-Based Simulations (SIMs) as possible.
Pro-Tip:
REG is heavy on rules. SIMs are the best way to see how multiple rules (like basis, depreciation, and gains) collide in a single problem. If you want to see how I practice these concepts step-by-step, you can check out my Free CPA 101 course.
REG Exam Structure & Weighting
The REG exam is more than just "tax." According to the AICPA Blueprints, the content is divided into five specific areas. Knowing these weights helps you prioritize your study time:
| Content Area | Weight |
|---|---|
| I. Ethics & Federal Tax Procedures | 10-20% |
| II. Business Law | 15-25% |
| III. Property Transactions | 5-15% |
| IV. Individual Taxation | 22-32% |
| V. Entity Taxation (C-Corps, S-Corps, Partnerships) | 23-33% |
Note on Numbers:
Don't panic about memorizing every inflation-adjusted limit (like the exact standard deduction or 401(k) contribution caps). The exam will typically provide these numbers in the problem or as a resource. Focus on the rules, not the temporary figures.
1. Individual Taxation: The Three Income Buckets
To keep Individual Taxation (Form 1040) clear, I always tell my students to visualize three distinct Income Buckets. This matters because losses in one bucket can't always offset gains in another.
Bucket 1: Ordinary Income
Your W-2 wages and self-employment income.
Bucket 2: Passive Income
Income from rental properties or limited partnerships where you don't "materially participate."
Bucket 3: Investment Income
Capital gains from selling stocks or bonds.
You must know the difference between Pre-AGI adjustments (the "above-the-line" deductions like HSA contributions or student loan interest) and Post-AGI deductions (Standard vs. Itemized).
Key Concept: Understanding how AGI acts as a "gatekeeper" for other credits and limits is essential for the SIMs.
2. Business Taxation & The Power of Basis
This is the "meat" of the exam. You need to distinguish between C-Corps (which pay tax at the entity level) and Pass-Through Entities (S-Corps, Partnerships, and LLCs) where the income flows to the individual.
The Most Critical Concept: Basis
At its simplest level, think of basis as the "investment" you've already paid tax on. It determines what you can take out of a company tax-free.
For a partner or shareholder, the general formula looks like this:
Basis = Initial Contribution + Share of Income - Distributions - Share of Loss
Critical Difference:
Partnerships include your share of entity debt in your basis, while S-Corps generally do not (unless it's a direct loan from you to the corporation).
3. Property Transactions
When a business sells an asset, you have to determine the "flavor" of that gain or loss. This depends on:
- Length of ownership (Short-term vs. Long-term)
- Type of property (Ordinary, Section 1231, or Capital)
- Depreciation Recapture (Converting what looks like a capital gain into ordinary income because you previously took a tax deduction for it)
Master These Concepts:
Make sure you are comfortable with MACRS depreciation, specifically the difference between Section 179 (immediate expensing with limits) and Bonus Depreciation.
4. Ethics and Business Law
This makes up about 30-40% of your exam!
It's the difference between a 74 and a 75.
Ethics
Focus on Circular 230 and tax preparer penalties. You need to know what constitutes:
- Negligence
- Gross negligence (constructive fraud)
- Fraud
Contracts
Know when a contract is valid, when it must be in writing (Statute of Frauds), and how Assignment works (transferring rights/duties to a third party).
Secured Transactions
Master the concepts of:
- Attachment (making the security interest effective against the debtor)
- Perfection (making it effective against the rest of the world)
Bankruptcy
Focus on the hierarchy of who gets paid first. Generally, it's:
Secured Creditors → Priority Unsecured Creditors (like child support or administrative fees) → General Unsecured Creditors
Conclusion
REG is a test of endurance and attention to detail. If you can master the "buckets" of income, the mechanics of basis, and the hierarchy of business law, you are well on your way to a passing score.
I've seen students from all backgrounds conquer this exam using this exact framework.
About the Author
Kyle Ashcraft is a CPA that scored a 90+ on all four CPA exams. Kyle founded Maxwell CPA Review, which is an exam-prep company that offers video courses and private tutoring.
Kyle can be reached at MaxwellCPAreview@gmail.com or by visiting MaxwellCPAreview.com.
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