The sweeping changes introduced by the 2017 Tax Cuts and Jobs Act (TCJA) are set to leave a lasting mark on the Regulation section of the CPA exam, effective January 2019. With December 10, 2018, marking the last day the REG Exam will be administered without content reflecting the TCJA, candidates need to be well-versed in the modifications shaping this crucial exam section. This article provides an in-depth exploration of the changes, shedding light on the specific areas within the REG Exam that are affected by the TCJA.
High-Level Overview of Changes
The revisions to the REG Exam can be broadly categorized into two key modifications:
Terminology Modifications: Addressing obsolescence resulting from the TCJA by updating and refining relevant terminology.
Addition of Task Statements: Introducing representative task statements to encompass significant new concepts ushered in by the TCJA.
Understanding the Specific Changes
To gain a comprehensive understanding of the impact of TCJA on the REG Exam, it's essential to delve into the specific areas within the exam that undergo changes.
Area I – Ethics, Professional Responsibilities and Federal Tax:
This area remains unaffected by the TCJA changes. Candidates can expect continuity in the examination of ethics, professional responsibilities, and federal tax concepts.
Area II – Business Law:
Similar to Area I, Business Law remains unchanged. The TCJA alterations do not extend to this section, providing candidates with a stable framework for testing.
Area III – Federal Taxation and Property Transactions (12-22% of REG):
The following group within Area III experiences changes:
Group B – Cost Recovery:
This group encompasses topics related to depreciation, depletion, and amortization. Candidates should be prepared for modifications in terminology and the introduction of new representative task statements reflecting TCJA-driven concepts.
Area IV – Federal Taxation of Individuals (15-25% of REG):
The following groups within Area IV witness changes:
Group C – Adjustments and Deductions:
Expect modifications in terminology and the addition of task statements to address adjustments and deductions aimed at arriving at adjusted gross income and taxable income.
Group F – Filing Status and Exemptions:
This group experiences changes aligned with TCJA-related concepts. Candidates should anticipate updates in terminology and the inclusion of new task statements.
Area V – Federal Taxation of Entities (28-38% of REG):
The following groups within Area V are impacted:
Group C – C Corporations:
Changes in terminology and the integration of representative task statements will reflect the TCJA's influence on C Corporations.
Group E – Partnerships:
Candidates should anticipate modifications in terminology and the addition of task statements addressing partnership-related concepts influenced by TCJA.
Strategic Considerations for Candidates
Now armed with a detailed understanding of the specific changes on the REG Exam, candidates face the strategic decision of when to undertake the exam. The timing can significantly impact the level of preparedness for the TCJA-driven modifications. As candidates weigh the pros and cons of taking the exam in 2018 versus 2019, staying tuned to the Vishal blog will provide valuable insights into making an informed decision.
In navigating the evolving landscape of the CPA exam, candidates must stay abreast of changes ushered in by significant legislative acts like the TCJA. The modifications to the REG Exam underscore the dynamic nature of the accounting profession, requiring candidates to adapt their preparation strategies accordingly. With a keen awareness of the
specific alterations within each area, candidates can approach the exam with confidence, knowing they are well-equipped to tackle the nuanced challenges presented by the TCJA. The commitment to staying informed and prepared positions candidates for success, ensuring they emerge from the CPA exam process with a comprehensive understanding of the latest tax regulations and their practical applications.
As the REG Exam undergoes these transformative changes, candidates are encouraged to leverage available resources and guidance. The Vishal blog, in particular, serves as a valuable platform for staying updated on crucial considerations, whether deciding between 2018 or 2019 for the exam or seeking insights into the evolving landscape of tax regulations.As aspiring CPAs prepare to navigate the challenging terrain of the REG Exam post-TCJA, a proactive and informed approach will be instrumental. The integration of TCJA-related content into the exam reflects the profession's commitment to ensuring that candidates are well-versed in the latest developments within the tax landscape. The journey toward CPA licensure is an evolving one, and candidates who embrace these changes with diligence and strategic planning are better positioned to thrive in their accounting careers.