Karen and Terry were divorced in Year 3. The divorce decree provides that beginning in Year 4, Terry pay alimony of $20,000 per year, to be reduced by 30% on their child’s 18th birthday. Karen and Terry’s child is currently 13 years old. During Year 4, Terry paid $9,000 to Karen’s landlord, $6,000 directly to Karen, and $5,000 to Wildwood College for Karen’s college tuition. What amount of these payments should be reported as income in Karen’s Year 4 income tax return?

The CPA REG exam (Taxation of Individuals) focuses on federal taxation, covering gross income inclusions/exclusions, adjustments to Adjusted Gross Income (AGI), itemized deductions, tax credits, and filing statuses. It comprises 22-32% of the Regulation section, testing ability to calculate individual tax liability, passive losses, and property transactions.  Key Topics in Individual Taxation (REG) Gross Income: Inclusions (wages, interest, dividends) and exclusions (gifts, life insurance proceeds). Adjustments & Deductions: Above-the-line adjustments to arrive at AGI (e.g., IRAs, student... Show more

The CPA REG exam (Taxation of Individuals) focuses on federal taxation, covering gross income inclusions/exclusions, adjustments to Adjusted Gross Income (AGI), itemized deductions, tax credits, and filing statuses. It comprises 22-32% of the Regulation section, testing ability to calculate individual tax liability, passive losses, and property transactions. 

Key Topics in Individual Taxation (REG)
Gross Income: Inclusions (wages, interest, dividends) and exclusions (gifts, life insurance proceeds).
Adjustments & Deductions: Above-the-line adjustments to arrive at AGI (e.g., IRAs, student loan interest).
Itemized Deductions: Medical expenses, taxes paid, interest (mortgage), and charitable contributions (Schedule A).
Filing Status & Exemptions: Single, Married Filing Jointly/Separately, Head of Household, Qualifying Surviving Spouse.
Tax Credits: Refundable (e.g., Earned Income Credit) vs. Nonrefundable (e.g., Child Tax Credit).
Property Transactions: Capital gains/losses, basis calculations, and depreciation recapture for individuals.
Loss Limitations: Passive activity loss rules and at-risk limitations. 

Important Details for Candidates
Exam Structure: Covers federal tax procedures, ethics, and professional responsibility (e.g., Treasury Dept Circular 230).
Key Dates: Individual tax returns are due April 15; form 4868 allows an automatic six-month extension.
Focus Areas: High focus on tax implications of pass-through entities (Partnerships, S Corps) and capital transactions.
Study Tip: Focus on applying tax laws through simulations rather than just memorizing rules.

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