Chapter 16Chapter 16

Tax ResearchTax Research

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Kevin MurphyKevin MurphyMark HigginsMark Higgins

Kevin MurphyKevin MurphyMark HigginsMark Higgins

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IntroductionIntroduction

Tax research is the process by which the tax consequences of a completed or proposed transaction are determined.

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Tax AuthoritiesTax Authorities

There are two classes of tax authoritiesPrimary

Authoritative law and writings of the three branches of the federal government: legislative, executive, and judicial

Secondary Supporting materials which provide

interpretation of the primary authorities

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Primary Authorities: Legislative

Primary Authorities: Legislative

U.S. ConstitutionArticle 1, Section 7Sixteenth Amendment

Internal Revenue Code of 1986 (the Code) Statutory languageLegislative intent

Tax treaties

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How a Bill Becomes LawHow a Bill Becomes Law

House Ways & MeansCommittee

Senate FinanceCommitteeHouse of

Representatives

Senate

JointConferenceCommittee

President

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Primary Authorities: Executive/Administrative

Primary Authorities: Executive/Administrative

Treasury Regulations Interpretive versus Legislative Proposed, temporary, and final

Revenue Rulings and Procedures Acquiescence and Non-acquiescence Letter Rulings

Before or after the action

Other IRS Pronouncements Memorandums Notices, announcements, publications, instructions

Primary Authorities: JudicialPrimary Authorities: Judicial

U.S. SupremeCourt

U.S. Courtsof Appeals

U.S. Court of Appeals for the Federal Circuit

U.S. Tax

Court

U.S. DistrictCourt

U.S. Court ofFederal Claims

Small claimsdivision of

U.S. Tax Court

Tri

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vel

App

ella

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vel

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Citations to Primary Authorities

Citations to Primary Authorities

References made to a primary authority should include a full citation

Examples are

Internal Revenue Code Sec. 108Treasury Regulation Reg. Sec. 1.61-12Revenue Ruling Rev. Rul. 54-56, 1954-2 C.B. 108U.S. Tax Court Case Julian S. Danenberg, 73 T.C. 370 (1979)

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Secondary Authorities: Tax Services

Secondary Authorities: Tax Services

Tax services fall into two categoriesServices with limited editorial discussion

but many short interpretive comments CCH’s Standard Federal Tax Reporter RIA’s United States Tax Reporter

Services with extensive editorial discussion and interpretation of the law RIA’s Federal Tax Coordinator 2d BNA’s Tax Management Portfolios Merten’s Law of Federal Income Taxation

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Secondary Authorities: Others

Secondary Authorities: Others

Computer assistance tools are used to speed researchLEXIS & WESTLAW

Internet accessCD-ROM

Citators are used to determine the history of a judicial decision

Tax Periodicals are used to keep up with current developments

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Types of ResearchTypes of Research

Tax Compliance ResearchFacts are knownGoal is to determine the consequence of a

completed transaction

Tax Planning ResearchFacts are open-endedGoal is to structure a future transaction for

taxpayer’s advantageNon-tax factors must be considered

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Tax Research ProcessTax Research Process

Determine the facts and establish relevance

Determine the issue(s) Locate and evaluate the relevant

authorities Assess the importance of each Understand the hierarchy of weight

Reach a conclusion and communicate the results

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End of Chapter 16End of Chapter 16