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I had this come up in a game last night and I'm wondering what the actual 'rule' is. We have always played that precise shot allowed you to ignore the -4 penalty for firing into melee. Last night the GM (one I hadn't played with before but who is an experienced PF GM ) ruled that you normally received a -8 penalty for firing into melee... -4 for 'cover' and -4 for firing into melee. Precise Shot only removed the 'firing into melee' piece. So you needed IMPROVED Precise Shot to reduce the penalty completely. Is this right? I thought the -4 for firing into melee WAS the penalty for cover.
What's the straight scoop?

StreamOfTheSky |

RAW, there are the two separate penalties. Though, ONLY if a creature is in between the archer and his target. Just "being in melee" alone doesn't incur the cover penalty if say...the archer were off to the diagonal left of the foe and his friend was directly below on the grid. He would have a clear line of fire, so no cover penalty.
Now, it's IME a common houserule to ignore the cover penalty for creatures in the way, because -8 to hit is pretty massive a penalty for someone w/o either feat trying to shoot. But RAW your GM is correct...assuming he didn't mean "in melee" as a blanket statement of any positioning where the target's in melee.

SlimGauge |

Your GM is correct, given the following (warning: bad ascii art ahead)
Firing from position 1 at the target incurs only the -4 for firing into melee. Firing from position 2 at the target incurs both -4 for firing into melee and the +4 to target's AC for the cover granted by the ally.
._.T._.1.
._.A._._.
._._._._.
._.2._._.
T = Target
A = Ally
1 = firing position 1
2 = firing position 2
Edit: moved the text above the "art" to prevent the avatar icon from messing it up. See the cover rules on page 195 to determine if the target has cover from any arbitrary firing position.

Adamantine Dragon |

One of the things that I almost never see mentioned, but that I make sure my players and GM understand, is that the "cover penalty" is halved ("partial cover") if "more than half" of the target is in view.
So, for example, if you attack from an angle, or if you are attacking a troll over the head of your halfling rogue... in those cases the +4 to AC granted for cover is reduced to +2 (most people refer to this as a -4 and -2 to the attack, but by RAW it is actually an armor bonus for the target, not a penalty for the shooter).
In most cases you can live with Precise shot and at worst have to deal with "partial cover" instead of full cover and only suffer the +2 AC boost to your target. You just have to use tactics and stuff.