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I was under the impression that precise shot negated the -4 modifier for cover thta your allies provide when in combat. I've heard differently, from a friend,who was at a con in a PFS game. He was told that Precise Shot negated the penalty for shooting into combat, but his allies provided cover so he was still at -4 to hit. This sounds strange. does that mean if you DON'T have Precise Shot that there is a -8 to hit?
Kind of. Precise Shot negates the penalty from shooting into melee, but not the penalty from firing through and allies square. Firing through an occupied square provides the target soft cover which is a -2 I believe. So the penalty for firing into melee and through an occupied square is -6.
Soft cover gives the target a +4 bonus to AC, not a -4 penalty to your attack roll.
Firing into melee gives a -4 penalty on the attack roll.
So firing into melee at a target with soft cover (from any creature, not just your allies) gives a -4 penalty on the attack roll and grants the target +4 AC. Effectively the same as a -8 penalty, but it actually isn't.
And yes, Precise Shot only removes the penalty for firing into melee. It does nothing against cover. To ignore cover/concealment (except total cover/concealment), you want Improved Precise Shot.