ATA Exam Outline

ACAT Step 3

Accredited Tax Advisor Exam Blueprint

Domain 1: Financial Statements Accounting

Task 1: Record Setup – Design a system for record setup to organize the financial data.

Knowledge of:

  1. Accounting cycle
  2. Accounting methods
  3. Debits and credits
  4. Journals and ledgers

Task 2: Establish a system to measure revenue and expense.

Knowledge of:

  1. Cash vs. accrual

Task 3: Documentation – Detail the process and procedures used in engaging and preparing financial statements.

Knowledge of:

  1. Engagement letters
  2. Financial reporting framework (e.g., generally accepted accounting principles [GAAP]) or financial accounting framework (e.g., other comprehensive basis of accounting [OCBOA])
  3. Work papers

Task 4: Balance Sheet – Prepare financial statements to report financial condition.

Knowledge of:

  1. Accounting principles (e.g., cash and equivalents, accounts receivable, discounted notes, investments, inventory, property and equipment, intangible assets, liabilities, current liabilities, long-term liabilities, leases, pensions, stockholder's equity)

Task 5: Income Statement – Prepare financial statements to report revenue and expenses.

Knowledge of:

  1. Accounting principles (e.g., revenue recognition, matching principle, owner's equity)

Task 6: Statement of Cash Flows – Prepare financial statements to report use and availability of cash.

Knowledge of:

  1. Direct or indirect method
  2. Operating activities
  3. Investing activities
  4. Financing activities

Task 7: Reports – Provide documents for owners and interested parties using client representations to provide additional information regarding financial statements.

Knowledge of:

  1. Disclosures
  2. Report/Transmittals
  3. Statement analysis
  4. Accounting pronouncements
  5. Depreciation
  6. Cost basis
  7. Going concern

 

Domain 2: Taxation

Task 1: Overview of Tax Structure – Identify the five basic taxable reporting entities (e.g., individuals, corporations, partnerships, estates, trusts).

Knowledge of:

  1. Tax entity determination reporting

Task 2: Individual Tax Returns (1040) – Collect information from the taxpayer to prepare a complete and accurate return.

Knowledge of:

  1. Self-employment (e.g., sole proprietor, farms)
  2. Rentals
  3. Inventory (e.g., FIFO, LIFO, lower cost of market)
  4. Depreciation (e.g., straight line, modified accelerated cost recovery system [MACRS], Section 179)
  5. Business use of home
  6. Farming activities
  7. Rental activities
  8. Basis of assets
  9. Independent contractor
  10. Taxability of gifts
  11. Taxability of insurance proceeds 

Task 3: Filing Consideration – Determine the correct filing status and eligible dependents for an individual tax return.

Knowledge of:

  1. Filing status choices
  2. Rules of dependency

Task 4: Inclusions in Income – Determine the sources of income to be included on a tax return.

Knowledge of:

  1. S. tax law (e.g., compensation income, including fringe benefits, scholarships, fellowships, teaching stipends, interest, dividends, capital gains, state and local refunds, alimony received, business and farm income, rental activities and pass-through entities, debt relief, gambling income, hobby income, prizes, jury duty, Social Security benefits, unemployment compensation, retirement distributions, life insurance, disability, VA benefits)

Task 5: Deductions for AGI – Determine the eligible adjustments from total income to produce adjusted gross income.

Knowledge of:

  1. S. tax law (e.g., alimony, self-employment health insurance deduction, health savings account [HSA] deductions, Keogh/Self-employment plan [SEP], IRA contributions, self-employment tax deduction, moving expense, penalty on early savings withdrawal, student loan interest, tuition and fees deduction, educator expenses, domestic production deduction)

Task 6: Itemized Deductions – Determine the use of standard or itemized deductions to calculate the lowest taxable income.

Knowledge of:

  1. Schedule A (e.g., medical expense, tax expense, interest expense, charitable contributions, miscellaneous, unreimbursed employee expenses, gambling losses, casualty/theft)

Task 7: Income Tax Credits – Determine eligible reduction in income tax from various tax credits.

Knowledge of:

  1. S. tax law (e.g., earned income tax credit, due diligence requirements, foreign tax credit, retirement credit, child and dependent care credit, education, credits, child tax credits, energy credits)

 Task 8: Limited Liability Companies/Disregarded Entities – Determine the best method of reporting client income and expenses for LLCs and disregarded entities.

Knowledge of:

  1. Single-member/multimember LLC tax law

Task 9: S Corporations (1120S) – Compile client data to prepare a complete and accurate S corporation tax return.

Knowledge of:

  1. S corporation tax law (e.g., basis, built-in gains tax, shareholder compensation, S corporation election and revocation, shareholder benefits, shareholder loans and distributions, eligible owners, at-risk rules, capital accounts)

Task 10: Partnerships (1065) – Compile client data to prepare a complete and accurate partnership tax return.

Knowledge of:

  1. Partnership tax law (e.g., basis – inside and outside, capital accounts, elections, at-risk rules)

Task 11: Corporations (1120) – Compile client data to prepare a complete and accurate corporate tax return.

Knowledge of:

  1. Corporate tax law

Task 12: Trust and Estates Income Tax (1041) – Compile client data to prepare a complete and accurate fiduciary tax return.

Knowledge of:

  1. Trust document
  2. The will
  3. Titling of assets (probate)
  4. Roles of trustees, executor, beneficiary, surviving spouse
  5. Fiduciary tax law

Task 13: Federal Estate Tax Return (706) – Compile client data to prepare a complete and accurate estate tax return.

Knowledge of:

  1. The will
  2. Trust document
  3. Probate
  4. Gift tax returns filed by decedent prior to death
  5. Estate tax law
  6. Roles of trustees, executor (personal representative), beneficiaries, and surviving spouse

Task 14: Nonprofit Issues (990) – Compile client data to prepare a complete and accurate nonprofit information return.

Knowledge of:

  1. Type of nonprofit (e.g., churches, veteran’s organizations, hospitals, member organizations, schools) and related tax code section
  2. Nonprofit tax law

Task 15: United States Gift (and Generation Skipping Transfer) Tax Return (709) – Compile and prepare gift tax returns to report the transfer of money or property.

Knowledge of:

  1. Limits on annual gift exclusion
  2. Transfer of assets to reduce estate tax

Task 16: Specialty Topics – Review additional topics that might affect the client.

Knowledge of:

  1. Investment taxation
  2. Divorce issues
  3. Community property
  4. Social Security and Medicare issues
  5. Retirement issues
  6. Net operating loss (NOL)
  7. Payroll
  8. Tax estimates for all types of entities (e.g., individuals, corporations)
  9. Affordable Care Act

 

Domain 3: Business Law

Task 1: Recognize different business entities and transactions to advise clients.

Knowledge of:

  1. Business law principles (e.g., property law, contracts, Uniform Commercial Code, agency, partnerships, corporations, trusts, limited liability companies)

Domain 4: Ethics

Task 1: Determine best practices and procedures for tax professionals.

Knowledge of:

  1. Circular 230
  2. Practice procedures
  3. Due diligence