In 2019, the biggest changes candidates will see on the CPA Exam will be on the Regulation (REG) section. Keep reading to learn more about where these REG changes came from, when the new tax law will be tested, what we recommend to candidates, and a list of exactly what those changes entail.
Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (TCJA) was signed by President Donald Trump and became public law in December 2017. The tax overhaul is the first of its kind in over 30 years, resulting in significant changes to both individual and corporate income taxes. Most of the cuts are effective starting in 2018; the individual tax cuts generally expire in 2025 while the business tax cuts will remain permanent.
Normally, when material on the CPA Exam changes, the new content becomes eligible for testing in the later of: (1) the first testing window beginning after the pronouncement’s earliest mandatory effective date or (2) the first testing window beginning six months after the pronouncement’s issuance date. However, the TCJA impacted the Regulation section to such an extent that the AICPA needed time to incorporate those changes and decided that no provisions of the TCJA, including those retroactive to periods before Dec. 31, 2017, would be eligible for testing until Jan. 1, 2019.
Sitting for REG in 2018 vs. 2019
Given the major changes that will hit in January 2019, we strongly recommend that students who have already begun to study, recently graduated, or have tax experience sit for REG in 2018. By getting this out of the way, you won’t have to learn the new REG standards and will be able to save major study time and aggravation.
On the other hand, we recommend that students without any REG knowledge hold off on sitting for the exam until 2019. Why? Many of the new REG standards have been simplified! This is good news for candidates who are starting from scratch.
How Surgent CPA Review is helping students
Because the 2019 REG changes are so substantial, Surgent has rolled out updated content ahead of schedule. All Surgent students have access to both 2018 and 2019 REG content, and simply need to choose the outline they’d like to study. These updates, like all updates, are always automatic and free of charge to our students.
Moreover, Surgent CPA Review offers students thorough transparency into and feedback on their CPA Exam readiness. Thanks to ReadySCORE™, students are able to dive into their CPA Exam readiness by content area and topic, and by question type. Once students reach the Review Phase of the software, they’re presented with their combined ReadySCORE, which estimates what they’d score on the CPA Exam if they took it that day. How accurate is ReadySCORE? Our analysis has shown that the average student’s combined ReadySCORE at the time they sit for the exam is with 4% of their actual exam score.
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Summary of 2019 REG Changes from TCJA
- Modify terminology in Groups, Topics and representative task statements to address obsolescence resulting from TCJA
- Add representative task statements to existing Groups/Topics to address significant new concepts introduced with TCJA:
- Compare tax benefits of tax depreciation options
- Calculate qualifying business income (QBI) deduction
- Understand relationships meeting the definition of dependent for purposes of determining taxpayer filing status options
- Compute taxable income, tax liability, and allowable credit
- Calculate tax credits for a C corporation
- Analyze the impact of net operating and/or capital losses for a C corporation from a tax planning perspective
- Identify situations where base erosion and anti-abuse tax (BEAT) would apply
- Identify factors that qualify income for Foreign Derived Intangible Income (FDII)
- Define the components of Global Intangible Low-Taxed Income (GILTI)
- Calculate the impact of partnership transfers on basis of partnership assets
Susan J. Cox, M.Acc., CPA is a Senior Technical Editor for Surgent CPA Review. Susan received her graduate and undergraduate degrees from Florida State University. Prior to joining Surgent, Susan worked as a technical editor for Thomson Reuters, an accounting instructor for the University of South Florida, a senior internal auditor for GTE, and an experienced senior auditor for Arthur Andersen & Co.