In the document "Specifications for Registered Tax Return Preparer Test ‘ released by the IRS in early September, 2011, several details about the exam were revealed.

Specificatly, regarding the content of the exam, the IRS published a more analitic details about the major topics that will be covered in the comptency test. The outline is divided into several domains with a specific wheigted percentage for each area.

The seven domain are:

Domain 1: Preliminary Work and Collection of Taxpayer Data (15%)

Domain 2: Treatment of Income and Assets (22%)

Domain 3: Deductions and Credits (22%)

Domain 4: Other Taxes (11%)

Domain 5: Completion of the Filing Process (10%)

Domain 6: Practices and Procedures  (5)%

Domain 7: Ethics Circular 230 Subparts A, B, and C

(excluding D, E), but not limited to the following:    (15%)

Each domain is open to more detailed subject matters of content specifications. For example, domain 2 is divided into four sub-domains, A,B,C,and D, where each sub-domain has its detailed sub-topics included. Each sub-domain also is open to more analitic topics of content.

Domain 2: Treatment of Income and Assets (22%)

A. Income

• Taxability of wages, salaries, tips, and other earnings (e.g., W-2 Wage and Tax Statement, cash).
• Interest Income (taxable and non-taxable) (e.g., Schedule B and 1099-INT).
• Dividend Income (e.g., Schedule B and 1099-DIV).
• Self-employment income and expenses (e.g., Schedule C Profit or Loss from Business and Form 1099-MISC Miscellaneous Income, cash).
• Rental income and expenses (e.g., Schedule E Supplemental Income and Loss).
• Identification of forgiveness of debt as income (including Form 1099-C Cancellation of Debt).
• Other income (e.g., alimony, barter income, hobby income, non-taxable combat pay, state income tax refund from prior years, prizes).

B. Retirement Income

• Reporting requirements of Social Security benefits (e.g., Form SSA-1099 Social Security Benefit Statement).
• Taxable distribution from an IRA including basis in an IRA (e.g., Form 8606 Non-deductible IRAs).
• Distributions from qualified plans (e.g., 401k, IRA, Roth IRA).
• Required minimum distributions from retirement plans

C. Property, Real and Personal

• Short-term and long-term capital gains and losses (e.g., Schedule D Capital Gains and Losses, Form 1099-B Proceeds from Broker and Barter Exchange Transactions).
• Determination of basis of assets (e.g., purchased, gifted, or inherited).
• Sale of non-business assets (gains or losses).
• Sale of a principal residence (e.g., IRC 121 exclusions, 1099S Proceeds from Real Estate Transactions).

D. Adjustments to Income

• Self-employment tax (e.g., Schedule SE Self-Employment Tax).
• Tuition and fees – (e.g., Form 8917 Tuition and Fees Deduction, Form 1098T Tuition Statement).
• Eligible Moving expenses – (e.g., Form 3903 Moving Expenses).
• Other adjustments to income (e.g., IRA contribution deduction).

The overal exam content focuses on the Form 1040 series preparation. The material to review for the exam are extensive and will require adequate planning of time and resources from candidates to the exam.

Read the next article of this series, "What is the List of Suggested Material to Review?

For the complete version of the document "Specifications for Registered Tax Return Preparer Test", please visit www.1040examprep.com