CPA REG: Basis, cost recovery and property transactions
Blueprint III · Area III, Federal Taxation of Property Transactions · 5–15% of REG
Ten REG questions on basis, cost recovery and property transactions, untimed, with a reason for every answer option.
Or take the full REG mock examA business sells equipment it bought for $100,000 and depreciated by $60,000, for $70,000. How is the gain characterized?
Basis, cost recovery and property transactions on CPA REG
Area III of REG (5–15%) covers federal taxation of property transactions: basis of assets acquired by purchase, gift or inheritance, cost recovery, and the amount and character of gains and losses, including nontaxable exchanges.
- Blueprint groups
- III
- Share of the section
- Area III, Federal Taxation of Property Transactions: 5–15%
- Our drill
- 10 questions from 10 on this topic, untimed, with a reason for every option; one free attempt, unlimited with a pass
What to know
- Gifted property takes the donor's basis for gain; if FMV at the gift was lower, FMV is the basis for loss, which can leave no gain or loss (IRC §1015).
- Inherited property takes FMV at death and is treated as held long-term (IRC §§1014, 1223(9)).
- In a like-kind exchange of real property, gain is recognized to the extent of boot received; the new basis is the old basis plus gain recognized minus boot (IRC §1031).
- §1245 recaptures depreciation on personal property as ordinary income; unrecaptured §1250 gain on real estate is taxed at up to 25% for individuals.
- Residential rental property is depreciated straight-line over 27.5 years and nonresidential real property over 39 years, both mid-month (IRC §168).
- H.R. 1 restored 100% bonus depreciation for qualified property acquired after January 19, 2025.
Test yourself on basis, cost recovery and property transactions
Ten REG questions on basis, cost recovery and property transactions, untimed, with a reason for every answer option.
Or take the full REG mock examCommon questions
How much of the REG section is basis, cost recovery and property transactions?
It sits in Blueprint Area III (III). The AICPA weights whole areas, not single topics; see the area’s range on the REG page. Our 72-question mock draws each area at the middle of its range.
Are these real REG questions?
No. The AICPA does not release live exam questions. These are original practice questions written to the published 2027 CPA Exam Blueprints, with a reason for every answer option and the standard or code section behind the key.
More REG topics
- Tax practice ethics and federal tax proceduresdrill
- Business law: agency, contracts, debtor-creditor, federal law and business structuresdrill
- Individual gross income and pass-through itemsdrill
- Individual deductions, loss limits, filing status and creditsdrill
- Book-tax differences and C corporationsdrill
- S corporations, partnerships, LLCs and exempt organizationsdrill
REG full mock exam: 4 hours, 5 testletsREG task-based simulations
Blueprint and exam facts checked November 2026: AICPA: Learn what is tested on the CPA Exam (Blueprints effective January 1, 2027) · AICPA: CPA Exam score release and testing windows · NASBA: CPA Exam FAQ · Virginia Board of Accountancy: CPA Exam fees.
Original independent practice questions written to the AICPA CPA Exam Blueprints. Not affiliated with or endorsed by the AICPA or NASBA.