You should be aware of the REG CPA Exam changes which take effect on July 1, 2019. AICPA announced the changes.
- Elimination of personal exemptions. Prior to the TCJA, a taxpayer could reduce taxable income by $4,050 deduction. After the TCJA, personal exemptions are eliminated.
- Raising the standard deduction. The standard deduction for single taxpayers went from $6,350 in 2017 to $12,000 under TCJA.
- Changing of individual income tax brackets.
- Flat 21% corporate tax rate.
- Increasing the 50% first-year bonus depreciation to 100%. This will apply to qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. The section 179 deduction is calculated before any bonus depreciation.
- Reduction of people paying the Alternative Minimum Tax (AMT). The AMT exemptions for individuals were increased. This will in turn, reduce the number of people subject to the AMT.
Furthermore, AICPA issued some clarifications for 2019.
TASK CLARIFICATION: Revised the first application representative task statement as follows: Calculate the direct and indirect ownership percentages of corporation stock or partnership interests to determine whether there are related parties for federal income tax purposes.
Revised the remembering and understanding representative task statements as follows: Recall assets included in a decedent’s gross estate for federal estate tax purposes. Recall allowable estate tax deductions for federal estate tax purposes.
AICPA issued some clarifications regarding the REG CPA Exam changes. These are not changes to the content that is testable.
- Assume all information provided in the question is material. You should apply all stated assumptions.
- If timing affects the tax treatment of the topic tested, the question will include a clear indication of timing.
- Assume that the event referenced in the question occurred in the current year and apply the most recent tax laws. Most specifically apply the TCJA tax reform.
The REG CPA Exam changes do not change the content of the REG exam study material.