How I Passed the REG Exam with a 91 | Kyle Ashcraft, CPA

Written By Kyle Ashcraft

My Study Approach for REG — How I Scored a 91

REG Exam Review: Study Strategy, Basis, Individual Taxation, and Business Law

Passing the REG exam is not about memorizing every temporary number in the tax code. It is about understanding the mechanics of how the rules work together — especially basis, income buckets, entity taxation, and business law relationships.

Back in 2019, I passed REG with a score of 91 alongside a 98 on BEC, 95 on FAR, and 90 on AUD. I later launched Maxwell CPA Review to teach students the same frameworks that worked for me.

In this guide, I’m breaking down both the study routine I used and the high-level REG topics that matter most on exam day.

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My Study Approach: The 140-Hour Rule

I studied for REG for about 7 to 8 weeks and put in around 140 hours. That was more than the minimum recommendation, but REG rewards repetition because the exam constantly tests how multiple rules interact inside the same problem.

I studied for REG while working a full-time job. Many sources suggest about 110 hours for REG, but I deliberately pushed that higher to around 140 hours so I could get comfortable with the nuances.

My Weekly Schedule

  • Monday–Friday: 2.5 hours each night focused strictly on new content. Watch the lectures, take notes, and build your summary outline.
  • Saturday–Sunday: 5 hours each day focused on review and practice. This is where you do as many MCQs and SIMs as possible.

Study Tip: REG is heavy on rules, but SIMs are where you see those rules collide. Basis, depreciation, gains, entity taxation, and business law often show up together. That is why SIM practice matters so much.

Kyle's 90+ Score Insight: Weekdays should push you forward through new material, and weekends should lock it in. Students get into trouble when they spend weekdays re-reviewing old concepts and then realize they are running out of time to finish the blueprint.

REG Exam Structure & Weighting

REG is not just “tax.” The AICPA blueprint divides the exam into five areas. Knowing the weighting helps you allocate your study time strategically instead of treating every topic like it carries equal value.

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%

Important note on numbers: do not panic about memorizing every inflation-adjusted limit. The exam usually provides temporary figures like contribution caps or standard deduction numbers when they are necessary. Focus on understanding the underlying rule.

1. Individual Taxation: The Three Income Buckets

Individual taxation becomes much easier when you organize income into three buckets: ordinary income, passive income, and investment income. That distinction matters because losses in one category do not always offset gains in another.

When teaching Form 1040, I like to frame everything around three separate income buckets. This gives students a cleaner mental model and helps them understand why certain loss limitations exist.

Bucket 1: Ordinary Income

W-2 wages and self-employment income.

Bucket 2: Passive Income

Rental income or limited partnership income where you do not materially participate.

Bucket 3: Investment Income

Capital gains from investments such as stocks and bonds.

You also need to know the difference between Pre-AGI adjustments and Post-AGI deductions. Pre-AGI items reduce AGI before you even get to the standard deduction or itemized deductions.

Study Tip: AGI is a gatekeeper. Many limitations, deductions, and credits either phase out or depend on AGI, so you cannot treat it as just another number in the middle of the tax return.

2. Business Taxation & The Power of Basis

Basis is one of the most important concepts in REG. It helps determine whether distributions are taxable, whether losses are deductible, and how much a partner or shareholder has already invested tax-wise in the entity.

This is the core of the exam. You need to distinguish between C-Corps, which pay tax at the entity level, and pass-through entities, where taxable income flows through to the owners.

Basis = Initial Contribution + Share of Income − Distributions − Share of Loss

At its simplest level, basis represents the amount of investment you have in the entity that has not yet been recovered tax-free. That is why it becomes so important when a question asks whether a distribution is taxable or whether a loss can be deducted.

Critical difference: partnerships generally include a partner’s share of entity debt in basis, while S-corporations generally do not unless there is a direct shareholder loan to the corporation.

Kyle's 90+ Score Insight: Basis questions often look intimidating because they mix multiple moving pieces into one simulation. Slow the problem down and update basis one layer at a time: contribution, income, distributions, then losses. REG rewards students who can stay organized under pressure.

3. Property Transactions

Property transactions are all about classifying the gain or loss correctly. The exam wants to know whether you understand the relationship between holding period, type of property, and depreciation recapture.

When a business sells an asset, the tax outcome depends on more than just sale price minus basis. You have to determine the “flavor” of the gain or loss.

  • Length of ownership: short-term vs. long-term
  • Type of property: ordinary, Section 1231, or capital
  • Depreciation recapture: converting part of what looks like capital gain into ordinary income because prior depreciation deductions were taken

Study Tip: Be comfortable with MACRS depreciation, and especially the distinction between Section 179 and Bonus Depreciation. That contrast shows up often.

4. Ethics and Business Law

Ethics and business law make up a major portion of REG. Students often underweight this area because it feels less technical than tax, but it is often the difference between passing and failing.

This area can make up roughly 30–40% of your exam.

For many candidates, it is the difference between a 74 and a 75.

Ethics

Focus on Circular 230 and tax preparer penalties. You need to know the difference between negligence, gross negligence, and fraud.

Contracts

Know when a contract is valid, when it must be in writing under the Statute of Frauds, and how assignment transfers rights or duties.

Secured Transactions

You should clearly understand attachment and perfection. Attachment makes the security interest enforceable against the debtor; perfection protects against the rest of the world.

Bankruptcy

Be comfortable with the hierarchy of who gets paid first.

Secured Creditors → Priority Unsecured Creditors → General Unsecured Creditors

Conclusion

REG is a test of endurance, organization, and attention to detail. If you can master the income buckets, the mechanics of basis, and the big-picture structure of business law, you will put yourself in a strong position to pass.

I have seen students from many different backgrounds succeed on this exam using this same framework.

About Maxwell CPA Review

Kyle Ashcraft is a CPA who scored 90+ on all four CPA exams and founded Maxwell CPA Review to help students pass with simpler, more strategic study systems.

Learn more here: https://maxwellcpareview.com/cpa-exam-review-course

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Stop just reading about how to pass and start practicing. I built a Free CPA 101 Course with guided video walkthroughs and practice questions to get you started.

Kyle Ashcraft
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