Many CPA candidates approach REG the wrong way. That is, REG is challenging not because it is the most difficult CPA section (eg, for 2025, REG had the highest pass rate of CPA Exam core), but because candidates often misunderstand how its content is tested. While all areas test at different skill levels, some areas are more focused on remembering and understanding and other areas are more focused on application and analysis.
With this distinction in mind, this article examines how REG is structured and tested, the different skill levels candidates are expected to demonstrate across areas, and how candidates can adapt their study strategies accordingly. It also highlights how the UWorld CPA platform supports candidates in building the knowledge and application skills needed to succeed on REG.
How REG Is Structured and Tested
REG is a four-hour exam consisting of 72 MCQs and eight TBS problems, with each component accounting for 50% of the final score. The AICPA CPA Exam Blueprints outline the substantive content tested on REG and divide the section into five areas:
- Area I: Ethics, Professional Responsibilities, and Federal Tax Procedures (10-20%)
- Area II: Business Law (15-25%)
- Area III: Federal Taxation of Property Transactions (5-15%)
- Area IV: Federal Taxation of Individuals (22-32%)
- Area V: Federal Taxation of Entities (23-33%)
Within each area, topics are tested through representative tasks assigned skill levels based on Bloom's Taxonomy. Although each area contains a mix of skill levels, the relative emphasis varies across the exam. These skill levels range from basic comprehension to higher-order analytical reasoning and are central to understanding how REG is designed. Those skill levels are, in descending order:
- Evaluation - the examination or assessment of problems and use of judgment to draw conclusions.
- Analysis - the examination and study of the interrelationships of separate areas in order to identify causes and find evidence to support inferences.
- Application - the use or demonstration of knowledge, concepts, or techniques.
- Remembering and Understanding - the perception and comprehension of the significance of an area utilizing knowledge gained.
Understanding this framework is critical because REG does not test all areas at the same skill level. Specifically, Areas I and II are weighted more heavily toward remembering and understanding, while Areas III, IV, and V place greater emphasis on application and analysis.
Accordingly, effective REG preparation requires more than simply covering every topic evenly. Candidates who understand how different areas tend to be tested can allocate study time more strategically, focusing more on memorization efforts for remembering and understanding areas and more on problem solving with application and analysis areas.
Areas Leaning Toward Remembering and Understanding
Ethics and Tax Procedures (Area I)
Area I tests ethics, professional responsibilities, licensing and disciplinary systems, federal tax procedures, and legal duties and responsibilities. It is comprised of nineteen representative tasks, of which twelve are remembering and understanding and seven are application. Accordingly, candidates should allocate more study time toward memorization and conceptual understanding over calculation-heavy practice, as this area emphasizes recognition of rules over computation.
Given this area’s emphasis on remembering and understanding, performance depends on how well candidates can recall relevant rules and procedure (eg, from the Circular 230 and IRS). Questions often focus on identifying the correct rule or determining the proper action rather than working through numerical tax problems, making accurate recall of definitions, timelines, and compliance requirements essential.
Effective preparation should emphasize repetition and structured review to strengthen memory retention. Tools such as flashcards, concise rule summaries, and targeted MCQ practice are particularly useful for reinforcing recall of ethics and tax practice standards. Regular review of penalties, practitioner duties, and related rules helps build the speed and accuracy needed for this area.
Business Law (Area II)
Area II tests business law and includes topics such as agency, contracts, debtor-creditor relationships, federal laws and regulations, and business structure. It is comprised of twenty-eight representative tasks, of which seventeen are remembering and understanding and eleven are application. Accordingly, candidates should focus more on understanding and retaining legal concepts, as the exam places greater weight on knowledge of rules than on analytical problem-solving or calculations.
Business law is inherently structured around legal rules and definitions, so success depends on the ability to recall how laws govern relationships between parties and how those rules apply in common business situations. Topics such as contracts, agency law, secured transactions, bankruptcy, and regulatory frameworks require candidates to understand legal duties and responsibilities, with many questions testing recognition of the correct legal principle rather than computation or complex analysis.
Because of this emphasis on remembering and understanding, studying should prioritize repetition and conceptual reinforcement. Candidates can benefit from outlining key doctrines, using flashcards for legal terminology, and practicing MCQs that reinforce rule recognition. Consistent review of legal terms and definitions helps ensure accurate recall for this area.
Areas Leaning Toward Application and Analysis
Federal Taxation of Property Transactions (Area III)
Area III tests federal taxation of property transactions and includes topics on asset basis and cost recovery. It is comprised of ten representative tasks, of which eight are application and two are analysis. Accordingly, this area emphasizes applying tax rules within varying factual situations rather than simply recalling definitions or formulas.
Candidates must understand how to determine asset basis, adjustments to asset basis, and cost recovery methods such as depreciation, amortization, and depletion. Many questions require application of tax rules through calculations, meaning conceptual understanding is essential alongside computational accuracy.
Because this area is application- and analysis-oriented, effective preparation should prioritize active problem solving over passive review. Most study time should be spent working through MCQs and TBS problems that require applying rules to fact patterns and determining outcomes.
Federal Taxation of Individuals (Area IV)
Area IV tests federal taxation of individuals and includes topics such as gross income, pass-through items, adjustments and deductions, loss limitations, filing status, tax liability, and tax credits. It is comprised of twenty-three representative tasks, of which four are remembering and understanding, thirteen are application, and six are analysis. Accordingly, candidates should focus their study on both conceptual understanding and application, with the latter holding greater weight.
This area requires a clear understanding of how a federal individual income tax return is structured and calculated. Candidates are expected not only to recognize rules governing each component of the return but also to compute key figures, including gross income, adjusted gross income, deductions, limitations, and credits. In short, candidates need to know relevant rules and calculations.
This area leans toward application and analysis over remembering and understanding. As such, effective study strategies should reflect this balance. Candidates should reinforce foundational rules using concise summaries and flashcards, but the majority of study time should be devoted to MCQ and TBS problem practice.
Federal Taxation of Entities (Area V)
Area V tests federal taxation of entities and includes topics such as book versus tax income, C corporations, S corporations, partnerships, LLCs, and tax-exempt organizations. It is comprised of twenty-five representative tasks, of which six are remembering and understanding, thirteen are application, and six are analysis.
This section is heavily calculation-driven and requires the ability to compute entity-level and flow-through taxation outcomes. Candidates must understand how book-to-tax differences are calculated, as well as the tax effects of entity operations.
Because this area is primarily application- and analysis-based, studying should emphasize repeated practice with calculation problems and scenario-based MCQs and TBS problems. Candidates should focus on full tax computations for each entity type, reinforcing both procedural steps and underlying concepts.
A Practical Time Allocation Framework
When considering a study plan for REG, the AICPA CPA Exam Blueprints serves as a useful starting point. For example, if 10-20% of REG is allocated to Area I, then a candidate should devote a comparable proportion of study time to that area. However, a more dynamic approach accounts for the skill levels assessed within each area.
Specifically, Areas I and II primarily emphasize remembering and understanding, and benefit more from shorter, repeated review cycles that reinforce retention (eg, flashcards, outlines, and concise rule summaries). In contrast, Areas III, IV, and V emphasize application and analysis and benefit more from study tools that reinforce problem-solving and analytical skills through practice.
Of course, every study plan is different and each candidate should consider their own areas of strength and weakness. To be sure, there is no one-size-fits-all study plan and all areas are potentially testable in an MCQ or TBS format. However, candidates who allocate study time based on both exam weighting and relative skill levels tested place themselves in a stronger position to succeed on the exam over those with an unstructured study plan.
How UWorld Prepares You for Both
UWorld's REG course is fully aligned with the AICPA CPA Exam Blueprints and is continuously updated to reflect the most recent tax law developments, including the OBBBA. The course is designed to support the full range of skill levels tested on REG, including remembering and understanding, application, and analysis.
The QBank supports targeted learning through MCQ and TBS problems and explanations. For areas emphasizing remembering and understanding, the platform reinforces retention through repeated exposure to rules, definitions, and conceptual explanations. For areas emphasizing application and analysis, it strengthens problem-solving skills by requiring candidates to apply tax rules across varied factual scenarios and multi-step computations.
SmartPath Predictive Technology adds a performance-based layer by benchmarking candidate progress against successful exam takers. It helps identify gaps in both conceptual understanding and applied problem-solving skills, allowing candidates to allocate study time more strategically across all REG areas and skill levels.
Collectively, these tools create a structured learning experience that reinforces foundational knowledge while progressively building the ability to apply and analyze that knowledge under exam conditions.
Final Takeaways
REG is built around a balance of conceptual understanding and applied problem-solving, with some areas leaning toward remembering and understanding and some areas leaning toward application and analysis. As a result, success on REG depends not only on learning the material itself, but also on understanding how different topics are tested and the skills candidates are expected to demonstrate.
Overall, successful preparation for REG requires aligning study methods with the structure of the exam, using memorization techniques for remembering and understanding-focused areas, and focusing on practice problems for application- and analysis-heavy areas. By recognizing these distinctions, candidates can study more efficiently and build the balance of knowledge and skill needed to perform well on exam day.
| Area | Weight | Total RTs | R&U | Application | Analysis |
|---|---|---|---|---|---|
| Area I: Ethics & Tax Procedures | 10--20% | 19 | 12 | 7 | 0 |
| Area II: Business Law | 15--25% | 28 | 17 | 11 | 0 |
| Area III: Property Transactions | 5--15% | 10 | 0 | 8 | 2 |
| Area IV: Individual Taxation | 22--32% | 23 | 4 | 13 | 6 |
| Area V: Entity Taxation | 23--33% | 25 | 6 | 13 | 6 |
Ready to put this into practice?
UWorld's REG course gives you the QBank, simulations, expert video instruction from the world's best CPA instructors Roger Philipp and Peter Olinto, and SmartPath analytics that tell you exactly where to focus next.
Frequently Asked Questions (FAQs)
It is genuinely both, and the proportion depends on the topic. Business law and ethics require strong memorization because the rules exist by statute and legal doctrine, not logic you can derive on the spot. Entity taxation and property transactions are calculation-heavy, particularly partnership basis, S-corporation basis ordering, and depreciation recapture. The AICPA Blueprints confirm this split: Areas I and II emphasize remembering and understanding, while Areas III, IV, and V emphasize application and analysis. Treating REG as purely one or the other is one of the most common reasons candidates underperform.
Partnership basis is widely considered the most calculation-intensive and error-prone topic on REG. It requires tracking a partner’s outside basis through contributions, income allocations, distributions, and loss allocations, in the correct sequence. S-corporation shareholder basis ordering rules run a close second. Both topics are heavily tested in task-based simulations, where you compute the answer without multiple-choice options to guide you
Not all of them. The AICPA generally provides inflation-adjusted figures (such as standard deduction amounts or contribution caps) when they are needed to solve a specific question. What you do need to memorize are the structural rules that do not change with inflation: the three-year and six-year statutes of limitations, the 80% NOL carryforward limitation, the five-year Section 1231 look-back period, and similar fixed rules. Focus on understanding how thresholds function within a rule rather than trying to memorize every current-year dollar figure.
Most estimates range from 84 to 112 hours, though the right number varies based on your background. Candidates with prior tax experience often need fewer hours; candidates with no tax background may need more. If you work in public accounting during tax season, consider scheduling REG for May through December to avoid studying over your busiest work period.
REG is scored on a scale of 0 to 99, and a 75 is required to pass. That score is not a percentage of questions answered correctly. It is a scaled score that accounts for question difficulty: harder questions are worth more when answered correctly. Multiple-choice questions account for 50% of your total score, and task-based simulations account for the other 50%. You can earn partial credit on TBSs since each simulation contains multiple response fields.
Only if you sit for REG on or after July 1, 2026. The AICPA has confirmed that provisions from the One Big Beautiful Bill Act (signed July 4, 2025) with effective dates in 2024 and 2025 become eligible for testing on REG starting July 1, 2026. If your exam date falls before that cutoff, you are testing on the current blueprints and do not need to know OBBBA provisions. Always verify with the AICPA’s published testing windows and confirm that your review course materials reflect the applicable tax law for your exam date.
References
- Association of International Certified Professional Accountants. (2025, November 5). Learn what to study for the CPA Exam. AICPA & CIMA.https://www.aicpa-cima.com/resources/download/learn-what-is-tested-on-the-cpa-exam
- Association of International Certified Professional Accountants & The Chartered Institute of Management Accountants. (2025, August 26). Effective dates of tax provisions in H.R. 1, the One Big Beautiful Bill Act (OBBBA) [PDF]. AICPA & CIMA. https://www.aicpa-cima.com/resources/download/effective-dates-of-tax-provisions-in-h-r-1-the-one-big-beautiful-bill-act
- Association of International Certified Professional Accountants. (2026). Uniform CPA Examination Blueprints effective January 1, 2026. AICPA & CIMA.https://assets.ctfassets.net/rb9cdnjh59cm/71s84dkfo3KEsoLlz4vv6G/f4314469ec5368b5b4dd0d0184f00a71/CPA_Exam_Blueprints_2026.pdf
- UWorld Accounting. (2026). REG CPA Exam 2026: Format, content & study tips. https://accounting.uworld.com/cpa-review/cpa-exam/reg/
- UWorld Accounting. (2026). CPA Exam pass rates.https://accounting.uworld.com/?p=84807
- UWorld Accounting. (2026). OBBBA & the CPA Exam: REG and TCP changes explainedhttps://accounting.uworld.com/blog/cpa-review/one-big-beautiful-bill-act-cpa-exam/
