Tax Research Project

Writing

Question Description

I have provided these files to explain the project:

1. Project I – Tax Research Instructions: It explains everything about the project

2. Client inquiries: there 3 inquiries need to be answered

3. Exhibit 2-9: this exhibit could be used as a template

4. Primary sources guideline

5. Sample: this sample could be used to get a general idea how the project would look like

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You can use these databases:

- CCH IntelliConnect (accessed via VPN)

- Checkpoint (formerly known as RIA Checkpoint) - these are 3 suggested sources to use in checkpoint:

1. Federal Tax Cordinator analysis (RIA)

2. Federal Tax handbook (RIA)

3. United States Tax reporter - Expectations (RIA)

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- There is no specific length of this project it just has to answer the questions efficiently, the screenshots going to cover a large portion of the document

- Please follow all the instructions & guidelines carefully


Unformatted Attachment Preview

Client Inquiries – 1. Danny, an avid college basketball fan, has always purchased his tickets from online ticket sites and ticket scalpers. However, this year he was invited to join the university’s ticket program. The program requires a $7,500 contribution to the university for the privilege or “right” to purchase season tickets. Participants in the program then pay $1,000 per season ticket. How much, if any, of the $7,500 and $1,000 payments is deductible? (assume that Danny itemizes deductions and would not be limited by any AGI limitation, if applicable) 2. Fred and Ida have discovered that if they get divorced in December of this year, file as single taxpayers, and then remarry in the following year, the arrangement would result in significant tax savings. Is this a permissible tax planning strategy? 3. Because a hurricane damaged their home, the Henri family must stay in a hotel for three weeks while their home is being repaired. During this three week period the family pays $4,200 for the room and $1,900 for meals. Their homeowner’s policy pays $6,100 to reimburse the Henri family for the lodging and meals. The family estimates that it would usually pay approximately $1,300 for three weeks of meals (if they were living in their home). To what extent, if at all, is the reimbursement includable in gross income? Tax Research Project | TAX 4001.002 | Spring 2020 Fact Pattern – South Florida CPAs, LLP is a boutique accounting firm in Tampa, FL. You are currently employed as a tax consultant at South Florida CPAs and have many intriguing clients with interesting (and sometimes strange) circumstances. Because the 2020 tax filing deadline is rapidly approaching, you receive several phone calls from clients inquiring about the tax consequences of recent transactions and events. The second and third pages of this document contain a summary of these phone calls. Note: you are expected to complete this project using current, post-Tax Cuts and Jobs Act (H.R.1) law. In other words, apply “new” law to the fact patterns below. To the extent your conclusion is contingent on an unknown fact, you should discuss possible outcomes for different assumptions. Deliverables – There are two distinct deliverables for this project. Please ensure that you submit both for an opportunity to earn full credit on this assignment. First, please prepare a separate internal research memo for each client inquiry you have been assigned (three in total). In general, the memos should document the analysis you performed and conclusions of your research. More specifically, the memos should reflect the following about each client’s inquiry:  Relevant facts  Issues (questions) identified from the facts  Applicable primary authority (importantly, IRS Publications may not be your only source for any particular client inquiry)  Conclusions and recommendations reached as a consequence of your research  Analysis performed (i.e., how the primary authority cited above addresses the issues) You may use the template found in Exhibit 2-9 of your textbook to guide you in drafting your memo. Second, once you have completed your memo, please attach copies and/or screenshots of all primary resources used in formulating your conclusions to your first deliverable. Other Items – Work will be performed individually. As noted in the announcement on Canvas, you have randomly been assigned to perform research on three inquiries from the list below. You may view your assigned inquiries on page four of this document. Deliverables will be evaluated on completion and adherence to the instructions above, but I do expect a bona fide attempt. Please make every effort to ensure that your submission reflects a professional document that you would be comfortable sending to a client who has paid substantial fees to have you perform this work. Once complete, please upload your memos to Canvas. 1 Case 2 Date: May 3th, 2020 Name: Question: Bill has a “friend” who stole a significant sum of money from his employer this year. This individual has not been suspected by the employer, though a formal investigation been launched to identify the perpetrator of the fraudulent activity. Issue: Must the thief include the stolen funds in his or her gross income? Citation: Code Sec. 165, Rev. Rul. 2009-9 § 22(a) of the Internal Revenue Code, § 61(a) of the Internal Revenue Code of 1954 Commissioner v. Wilcox, 327 U. S. 404, overruled. Pp. 366 U. S. 213-222 §145(b) of the Internal Revenue Code of 1939 and § 7201 of the Internal Revenue Code of 1954. Conclusion: The thief is required to include it in his gross income, or they will be convicted with attempting to evade the federal tax. Reasoning: Embezzled money is taxable income of the individual in the year of the activity that has occurred under the internal revenue code of 1954 which defines gross income as all income from whatever source its derived from. Declaring the money is required by law but it won’t make it legal to the IRS, it should be reported in your income on form 1040, line 21 or schedule c or schedule C-EZ for the self-employment activity. The line 21 doesn’t indicate illegal income, it’s a type of income that has generated from miscellaneous income. Source: Case 5 Date: October 27th, 2019 Name: Omar Helal Question: Elsa found nearly $10,000 cash inside the spare tire compartment of a used car she purchased at an auction in December of last year. She did not discover the money until February of the following year. The auctioneer has not asked about the vehicle, nor has anyone else stepped forward to claim the money. Issue: Must the cash be included in Elsa’s gross income? If so, in what year must the income be recognized? Citation: Rev.Rul. 61, 1953-1 Cesarini v. United States, 296 F. Supp. 3 (N.D. Ohio 1969), Conclusion: Elsa still has to record the $10,000 that she found on her gross income on the year that she discovered them, unless if she decided to give the amount to the police, so they may find their rightful owner. Reasoning: The U.S internal revenue code 61 states that all money should be reported in the gross income no matter what source they derived from. According to Elsa’s case, she has two solutions, as long as nobody asked for the money or the spare tire, she is considered as the owner of it, but she will be obligated to report those money on her income on line 21 of schedule C as a self-employment income or she would go back to the auction and give them back until no one claimed them they will go back to the finder. Source: Case 3 Date: October 27th, 2019 Name: Omar Helal Question: Carolyn, a self-employed education consultant, is a Canadian citizen working in the United States on a temporary worker visa. Upon expiration of her visa Carolyn is required to obtain a Green Card to continue working with many of her clients in the United States. Carolyn obtains a Green Card but pays attorney and filing fees amounting to $9,000 in the process. Issue: How much of this amount, if any, may Carolyn deduct on her return? Conclusion: Carolyn has to deduct only 10% of filing fees, which means that Carolyn has to deduct $900 while making payment of that attorney and filing fee. Reasoning: In the case of a nonresident alien individual, the deductions shall be allowed only for purposes of section 871(b) and (except as provided by subsection (b)) only if and to the extent that they are connected with income which is effectively connected with the conduct of a trade or business within the United States; and the proper apportionment and allocation of the deductions for this purpose shall be determined as provided in regulations prescribed by the Secretary or his delegate Source: Case 2 Date: Name: Question: Bill has a “friend” who stole a significant sum of money from his employer this year. This individual has not been suspected by the employer, though a formal investigation been launched to identify the perpetrator of the fraudulent activity. Issue: Must the thief include the stolen funds in his or her gross income? Citation: Code Sec. 165, Rev. Rul. 2009-9 § 22(a) of the Internal Revenue Code, § 61(a) of the Internal Revenue Code of 1954 Commissioner v. Wilcox, 327 U. S. 404, overruled. Pp. 366 U. S. 213-222 §145(b) of the Internal Revenue Code of 1939 and § 7201 of the Internal Revenue Code of 1954. Conclusion: The thief is required to include it in his gross income, or they will be convicted with attempting to evade the federal tax. Reasoning: Embezzled money is taxable income of the individual in the year of the activity that has occurred under the internal revenue code of 1954 which defines gross income as all income from whatever source its derived from. Declaring the money is required by law but it won’t make it legal to the IRS, it should be reported in your income on form 1040, line 21 or schedule c or schedule C-EZ for the self-employment activity. The line 21 doesn’t indicate illegal income, it’s a type of income that has generated from miscellaneous income. Source: Case 5 Date: Name: Question: Elsa found nearly $10,000 cash inside the spare tire compartment of a used car she purchased at an auction in December of last year. She did not discover the money until February of the following year. The auctioneer has not asked about the vehicle, nor has anyone else stepped forward to claim the money. Issue: Must the cash be included in Elsa’s gross income? If so, in what year must the income be recognized? Citation: Rev.Rul. 61, 1953-1 Cesarini v. United States, 296 F. Supp. 3 (N.D. Ohio 1969), Conclusion: Elsa still has to record the $10,000 that she found on her gross income on the year that she discovered them, unless if she decided to give the amount to the police, so they may find their rightful owner. Reasoning: The U.S internal revenue code 61 states that all money should be reported in the gross income no matter what source they derived from. According to Elsa’s case, she has two solutions, as long as nobody asked for the money or the spare tire, she is considered as the owner of it, but she will be obligated to report those money on her income on line 21 of schedule C as a self-employment income or she would go back to the auction and give them back until no one claimed them they will go back to the finder. Source: Case 3 Date: Name: Question: Carolyn, a self-employed education consultant, is a Canadian citizen working in the United States on a temporary worker visa. Upon expiration of her visa Carolyn is required to obtain a Green Card to continue working with many of her clients in the United States. Carolyn obtains a Green Card but pays attorney and filing fees amounting to $9,000 in the process. Issue: How much of this amount, if any, may Carolyn deduct on her return? Conclusion: Carolyn has to deduct only 10% of filing fees, which means that Carolyn has to deduct $900 while making payment of that attorney and filing fee. Reasoning: In the case of a nonresident alien individual, the deductions shall be allowed only for purposes of section 871(b) and (except as provided by subsection (b)) only if and to the extent that they are connected with income which is effectively connected with the conduct of a trade or business within the United States; and the proper apportionment and allocation of the deductions for this purpose shall be determined as provided in regulations prescribed by the Secretary or his delegate Source: Tax Research: Understanding Sources of Tax Law (Why my IRC beats your Rev Proc!) Federal Tax Law Hierarchy Tax research can be daunting in the best of circumstances. Seasoned tax professionals have long mastered the intricacies of tax research and the diverse document types that make up the massive collection of sources that must be navigated. For new tax professionals, however, navigating the morass of legal authority, kinds of documents, and sheer volume of documents can be overwhelming. To be a successful tax researcher requires a basic understanding of the sources of tax law as well as how those individual sources relate to each other. This “Tax Research: Understanding Sources of Tax Law” series is designed to help the new tax researcher navigate the complicated tax research landscape. As with any form of research, some sources of content are more authoritative than other sources. In doing tax research, the goal is to find what the law dictates about a particular issue. The Internal Revenue Code is, therefore, the primary and ultimate authority for federal tax research. If the answer is clearly stated in the statute, it is still important to check for any further developments, such as regulations or judicial decisions that interpret the law and apply that law to a given set of facts. In addition, given the frequency of changes to laws and regulations, it is important to be aware of any proposed modifications to the statute or related regulations. In going beyond statutes for tax information, it is important to keep in mind the relative authority of the source of the tax information. Some important sources are not authoritative at all, offering only guidance. Still, guidance can be very important to a tax research project where the authoritative sources do not directly address the question. Primary and Secondary Sources Generally, primary sources of federal law are documents issued by a branch of the federal government or by a federal agency. When providing support for a position, primary sources carry more weight of authority than secondary sources. Primary and Secondary Sources Generally, primary sources of federal law are documents issued by a branch of the federal government or by a federal agency. When providing support for a position, primary sources carry more weight of authority than secondary sources. With respect to federal tax law, primary sources that carry a high weight of authority include the following: • Internal Revenue Code • Other non-codified Federal tax statutes • Final and temporary regulations • Judicial decisions on tax matters • Revenue Rulings • Revenue Procedures • Other published IRS positions (e.g., Notices and Announcements) ...
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