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Tax Research Assignments Background The five ste...

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Tax Research Assignments Background The five steps in tax research are: ? understand the facts ? identify issues ? locate relevant authorities ? analyze the tax authorities ? communicate research results. The two types of tax services that tax professionals use in tax research are annotated tax services, arranged by code section, and topical services, arranged by topic. Research questions often consist of questions of fact or questions of law. ? The answer to a question of fact hinges upon the facts and circumstances of the taxpayer's transaction. ? The answer to a question of law hinges upon the interpretation of the law, such as interpreting a particular phrase in a code section. When the researcher identifies that different authorities have conflicting views, she should evaluate the ?hierarchy,? jurisdiction, and age of the authorities. Once the tax researcher has identified relevant authorities, she must make sure that the authorities are still valid and up to date. The most common end product of a research question is a research memo, which has five basic parts: (1) facts, (2) issues, (3) authority list, (4) conclusion, and (5) analysis. Sample Research Memo Facts: Discuss facts relevant to the question presented?that is, facts that provide necessary background of the transaction (generally, who, what, when, where, and how much) and those facts that may influence the research answer. Keeping the fact discussion relatively brief will focus the reader's attention on the relevant characteristics of the transaction. Issues: State the specific issues that the memo addresses. This section confirms that you understand the research question, reminds the reader of the question being analyzed, and allows future researchers to determine whether the analysis in the memo is relevant. Issues should be written as specifically as possible and be limited to one or two sentences per issue. Authorities: In this section, the researcher cites the relevant tax authorities that apply to the issue, such as the IRC, court cases, and revenue rulings. How many authorities should you cite? Enough to provide a clear understanding of the issue and interpretation of the law. Remember, in order to reach an accurate assessment of the strength of your conclusion, you should consider authorities that may support your desired conclusion, as well as those that may go against it. Conclusion: There should be one conclusion per issue. Each conclusion should answer the question as briefly as possible, and preferably indicate why the answer is what it is. Analysis: The goal of the analysis is for the researcher to provide the reader a clear understanding of the area of law and specific authorities that apply. Typically, an analysis will be organized to discuss the general area(s) of law first (the code section) and then the specific authorities (court cases, revenue rulings) that apply to the research question. How many authorities should you discuss? As many as necessary to provide the reader an understanding of the issue and relevant authorities. After you discuss the relevant authorities, apply the authorities to your client's transaction and explain how the authorities result in your conclusion. ____________________________________________________________________________ Client Letters In addition to internal research memos, tax professionals often send their clients letters that summarize their research and recommendations. Basic components of the client letter include: (1) research question and limitations, (2) facts, (3) analysis, and (4) closing. Here is a sample letter: Assignments For this course you will have three tax research assignments. Each research assignment will include a memo and a client letter. Please submit your memo and client letter as an assignment upload in WebTycho. Tax Research Assignment 1 (due May 18, 2013) The facts for the first assignment are as follow: In 2009, Mr. Smith purchased a principal residence for $1,500,000. He made a down payment of $300,000 and financed the remainder by borrowing $1,200,000 through a loan secured by the residence. In 2009, Mr. Smith paid interest that accrued on the indebtedness during that year. He had no other debt secured by the residence. May he deduct the entire amount of interest which was paid on the home loan? Your research assignment will be graded using the following criteria: 1. Recognition of the important facts and issues 2. Correct conclusion 3. Proper citation of relevant sources 4. Format, Spelling & Grammar 5. Clarity of writing Tax Research Assignment 2 (due June 1, 2013) The facts for this assignment are as follow: R.E.M., a calendar year corporation and Athens, Georgia, band recently sold tickets ($20,000,000) for concerts scheduled in the United States for next year and the following year. For financial statement purposes, R.E.M. will recognize the income from the tickets when it performs the concerts. For tax purposes, it uses the accrual method and would prefer to defer the income from the ticket sales until it performs the concerts. This is the first time that it has sold tickets one or two years in advance. Michael Stipe has asked your advice. Your research assignment will be graded using the following criteria: 1. Recognition of the important facts and issues 2. Correct conclusion 3. Proper citation of relevant sources 4. Format, Spelling & Grammar 5. Clarity of writing Tax Research Assignment 3 (due June 15, 2013) The facts for this assignment are as follow: Mary and Bob have been married for 25 years. They are both college professors. Mary (50 years of age) makes $65,000 annually and Bob (60 years of age) makes $75,000 annually. Their oldest daughter is getting married. Bob and Mary would like to either 1) take out a second mortgage on their home (they can get an interest rate of 7 percent) or 2) withdraw funds from their IRAs or 3) sell their rental property. The cost of the wedding is $35,000. The equity in their home is $150,000; they have $80,000 in IRAs between the two of them and the basis of the rental property is $20,000. The rental property can be sold for $120,000. Mary and Bob want to know how they should finance the wedding and if tax implications will be a factor. Your research assignment will be graded using the following criteria: 1. Recognition of the important facts and issues 2. Correct conclusion 3. Proper citation of relevant sources 4. Format, Spelling & Grammar 5. Clarity of writing

 

Paper#5806 | Written in 18-Jul-2015

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