AICPA REG : CPA Regulation

REG real exams

Exam Code: REG

Exam Name: CPA Regulation

Updated: Sep 08, 2026

Q & A: 70 Questions and Answers

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AICPA REG Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Federal Taxation of Property Transactions5-15%- Gains and losses on disposition of assets
- Basis, cost recovery (depreciation and amortization)
Topic 2: Federal Taxation of Individuals22-32%- Tax filing requirements and procedures
- Adjustments, deductions, exemptions and credits
- Individual taxable income and tax compliance
Topic 3: Federal Taxation of Entities23-33%- Tax compliance for corporations, partnerships, LLCs, and S corporations
- Entity-level tax planning and reporting requirements
Topic 4: Business Law15-25%- Agency, contracts, and debtor-creditor relationships
- Business structures and federal business regulations
- Legal duties and responsibilities in business transactions
Topic 5: Ethics, Professional Responsibilities and Federal Tax Procedures10-20%- Ethics and responsibilities in tax practice (Treasury Department Circular 230)
- Federal tax procedures, disclosures, penalties, and appeals
- Licensing and disciplinary systems for CPA practice

AICPA CPA Regulation Sample Questions:

Question #1

The uniform capitalization method must be used by:
I. Manufacturers of tangible personal property.
II. Retailers of personal property with $2 million dollars in average annual gross receipts for the 3
preceding years.

  • A. Both I and II.
  • B. Neither I nor II.
  • C. I only.
  • D. II only.
Answer: C

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Question #2

Clark bought Series EE U.S. Savings Bonds after 1989. Redemption proceeds will be used for payment of
college tuition for Clark's dependent child. One of the conditions that must be met for tax exemption of
accumulated interest on these bonds is that the:

  • A. Purchaser of the bonds must be the sole owner of the bonds (or joint owner with his or her spouse).
  • B. Bonds must be bought by a parent (or both parents) and put in the name of the dependent child.
  • C. Bonds must be bought by the owner of the bonds before the owner reaches the age of 24.
  • D. Bonds must be transferred to the college for redemption by the college rather than by the owner of the
    bonds.
Answer: A

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Question #3

Don Wolf became a general partner in Gata Associates on January 1, 1989, with a 5% interest in Gata's
profits, losses, and capital. Gata is a distributor of auto parts. Wolf does not materially participate in the
partnership business. For the year ended December 31, 1989, Gata had an operating loss of $100,000.
In addition, Gata earned interest of $20,000 on a temporary investment. Gata has kept the principal
temporarily invested while awaiting delivery of equipment that is presently on order. The principal will be
used to pay for this equipment. Wolf's passive loss for 1989 is:

  • A. $0
  • B. $5,000
  • C. $6,000
  • D. $4,000
Answer: B

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Question #4

Under the uniform capitalization rules applicable to property acquired for resale, which of the following
costs should be capitalized with respect to inventory if no exceptions are met?

  • A. Option B
  • B. Option D
  • C. Option C
  • D. Option A
Answer: B

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Question #5

On December 31, 1989, a building owned by Pine Corp. was totally destroyed by fire. The building had
fire insurance coverage up to $500,000. Other pertinent information as of December 31, 1989 follows:

During January 1990, before the 1989 financial statements were issued, Pine received insurance
proceeds of $500,000. On what amount should Pine base the determination of its loss on involuntary
conversion?

  • A. $560,000
  • B. $530,000
  • C. $550,000
  • D. $520,000
Answer: B

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