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CPA REG — Federal Tax Concepts & Business Law flashcards

10 of 70 cards free to study here · 14 topics · the whole deck is built into Willys

Tax procedure and Circular 230, agency, contracts and UCC sales, secured transactions, suretyship and bankruptcy, securities law, basis, capital gains, like-kind exchanges, Section 121, and individual, C corp, S corp and partnership tax.

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Learn deck · part of CPA Exam (core) · written against: AICPA CPA Exam Blueprints under CPA Evolution (2024 core: FAR, AUD, REG); no year-indexed tax figures. Updated 2026-10-10.

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  1. A taxpayer files her return on February 20, before the April due date. When does the general statute of limitations on assessment expire?
    Three years after the due date — a return filed early is treated as filed on the due date, and the general assessment period is three years from the later of filing or the due date.
    Tax Procedures & Ethics
  2. An agent signs a contract to sell the principal's land, but the agent was appointed only orally. Is the principal bound?
    Generally no. Under the equal dignity rule, when the underlying contract must be in writing (as a land sale must), the agent's authority must also be in writing.
    Agency
  3. What three requirements must be met for a security interest to attach under UCC Article 9?
    The secured party gives value, the debtor has rights in the collateral, and there is a signed (authenticated) security agreement describing the collateral (or the secured party has possession or control).
    Secured Transactions
  4. A creditor's loan is backed by a surety. When the debtor defaults, must the creditor first sue the debtor?
    No. A surety is primarily liable, so the creditor may demand payment from the surety immediately.

    Watch out: a guarantor of collection is liable only after the creditor has exhausted remedies against the debtor.
    Suretyship & Bankruptcy
  5. Three people start a business together without filing anything with the state. What is their liability for business debts?
    They have formed a general partnership by default, so each partner is personally and jointly and severally liable for partnership obligations.
    Business Structures
  6. What is the basis of property purchased with cash and a mortgage the buyer assumes?
    Cost: cash paid plus liabilities assumed plus acquisition costs such as commissions, title fees and recording fees.
    Basis of Property
  7. Since 2018, which property qualifies for a Section 1031 like-kind exchange?
    Only real property held for productive use in a trade or business or for investment. Personal property, dealer inventory and a personal residence do not qualify.
    Like-Kind & Home Sales
  8. A cash-basis taxpayer receives a bonus check on December 31 but deposits it in January. When is it taxable?
    In December — a check in hand is a cash equivalent, so receiving it on December 31 is actual receipt; depositing it later does not move the income.

    Watch out: income credited or made available without substantial restriction is also taxable under constructive receipt, even if not taken.
    Individual Taxation
  9. What are the main eligibility requirements for S corporation status?
    A domestic corporation with no more than 100 shareholders, only eligible shareholders (individuals who are US citizens or residents, estates, certain trusts and exempt organizations), and one class of stock (voting differences are allowed).
    S Corporations
  10. How is an LLC classified for federal tax purposes if it makes no election?
    A single-member LLC is a disregarded entity; a multi-member LLC is taxed as a partnership. Either can elect corporate treatment under the check-the-box rules.
    Partnerships & LLCs

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About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

  • Checked against the AICPA CPA Exam REG blueprint (topic list only; no text copied).
  • Checked against the Internal Revenue Code and Treasury Circular 230 (U.S. government works, public domain), UCC Articles 2 and 9, the Bankruptcy Code, and the Securities Acts of 1933 and 1934; reference only. Year-indexed thresholds deliberately omitted.

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