1-1 ©2009 pearson education, inc. publishing as prentice hall
TRANSCRIPT
1-1©2009 Pearson Education, Inc. Publishing as Prentice Hall
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TAX RESEARCHTAX RESEARCH(1 of 2)(1 of 2)
Overview of tax researchSteps in the tax research processImportance of facts to the tax
consequencesSources of tax lawTax services
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TAX RESEARCHTAX RESEARCH(2 of 2)(2 of 2)
CitatorsComputers as a research toolStatements on standards for tax
services
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Overview of Tax Overview of Tax ResearchResearch
(1 of 2)(1 of 2)
Close-fact or tax complianceFacts already occurredDiscovery of tax consequencesProper disclosure
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Overview of Tax Overview of Tax ResearchResearch
(2 of 2)(2 of 2)
Open-fact or tax-planningBefore structuring or concluding a
transactionMinimization of taxesCareful compliance permits legal
avoidance of taxation
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Steps in the Tax Steps in the Tax Research ProcessResearch Process (1 of 2)(1 of 2)
Determine the factsIdentify the issues (questions)Locate applicable authoritiesEvaluate authorities
Choose which to follow when authorities conflict
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Steps in the Tax Steps in the Tax Research ProcessResearch Process (2 of 2)(2 of 2)
Analyze facts in terms of applicable authorities
Communicate conclusions and recommendations to client
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Importance of the Importance of the Facts to the Tax Facts to the Tax ConsequencesConsequences
Ambiguous situations (gray areas)Facts are clear but the law is notLaw is clear but the facts are not
Advance planning permits facts to develop that produce favorable tax consequences
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Sources of Tax LawSources of Tax Law(1 of 2)(1 of 2)
Legislative processInternal Revenue CodeTreasury RegulationsAdministrative pronouncements Judicial decisionsTax treatiesTax periodicals
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Legislative ProcessHouse Ways and Means CommitteeVoted on by full HouseSenate Finance CommitteeVoted on by full SenateConference Committee
Voted by both full House and SenateSigned or vetoed by President
Override veto by 2/3 vote by both houses
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Internal Revenue Code (IRC)
Title 26 of the United States Code enacted by Congress
OrganizationTitle
SubtitleChapter
Subchapter - Part
- Subpart - Section
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Treasury Regulations(1 of 3)
Treasury Dept. delegates authority to IRS to promulgate Treas. Regs.
Types of Treasury Regulations Proposed: no authoritative weightTemporary
Provide immediate guidanceSame authority as Final Regs.
Final
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Treasury Regulations(2 of 3)
Interpretative regulationsInterpret related Code sectionLess authority than IRC
Legislative regulationsAlmost the same authority as IRC
Legislative reenactment doctrine
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Treasury Regulations(3 of 3)
1.165-51 – Income tax165 – IRC citation5 – 5th regulation
Subject matter1 – Income tax20 – Estate tax25 – Gift tax301 – Admin/procedural matters601 – Procedural rules
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Administrative Pronouncements (1 of 5)
Revenue RulingsMore specific than Regs.Less authority than Regs.
Revenue ProceduresIRS guidance on procedural
matters
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Administrative Pronouncements (2 of 5)
Citation of Revenue Rulings and ProceduresRev. Rul. (or Proc.) 97-4, 1997-1
C.B. 54th Rev. Ruling of 1997
Beginning with 2000, all four digits of the year are used (e.g., Rev. Rul. 2007-5)
In Cumulative Bulletin 1997-1 on p. 5
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Administrative Pronouncements (3 of 5)
Letter RulingsReply to specific taxpayer questionOnly authority for specific taxpayerLtr. Rul. 200130006 (August 6,
2001)2001 – year30 – week006 – 6th letter ruling of the 30th week
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Administrative Pronouncements (4 of 5)
Other interpretationsTechnical Advice Memoranda
IRS advice to an IRS agent on technical matters
Issued to public in form of letter rulingsInformation releases
Like press releasesWritten in lay terms Sent to newspapers
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Administrative Pronouncements (5 of 5)
Other interpretations (continued)Announcements and notices
More technical than information releases
Address current tax developmentsIRS bound by to follow
Just like Revenue Rulings and Procedures
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Judicial Decisions
Overview of court systemU.S. Tax CourtU.S. District CourtsU.S. Court of Federal ClaimsU.S. Supreme CourtPrecedential value of various
decisions
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Overview of Court System
U.S. TaxCourt
U.S . District Courtfor taxpayer's
district
Court of Appeals fortaxpayer's geographicaljurisdiction (1st - 11th &
D.C. Circuits)
U.S . Court ofFederal Claims
U.S. Court of Appealsfor Federal Circult
Suprem e Court
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U.S. Tax Court(1 of 3)
Taxpayer does not pay deficiency before litigating case
No jury trial availableRegular and Memorandum
decisionsSmall Cases ProcedureAcquiescence policy
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U.S. Tax Court(2 of 3)
Regular decisionsFirst time court hears case
Memo decisionsFactual variations of previous cases
Small cases procedureCases of <$50,000 eligibleLess formal than regular tax court
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U.S. Tax Court(3 of 3)
Acquiescence policyIRS announces whether or not it
agrees with Tax Court decisions
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U.S. District Courts
May request a jury trialMust pay deficiency firstUnreported decisions
Decisions not officially reportedPublished by RIA and CCH
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U.S. Court of Federal Claims
No jury trialMust pay deficiency firstDecisions appealable to Circuit
Court of Appeals for the Federal Circuit
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Circuit Courts of Appeals
Losing party at trial level may appeal decision to appellate court
Circuit Courts of Appeals Appeals from Tax Court & district courtsBased upon geography
Court of Appeals for the Federal CircuitAppeals from U.S. Court of Federal Claims
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Supreme Court
Very few tax cases are heardHears cases when
Circuit courts are divided orIssue of great importance
Same authority as IRC
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Precedential Value of Decisions
Same Court
Tpayer’s Circuit
Supreme Court
Golsen Rule
DC X X X
TC X X X X
CFC X X X
CA X X
SC X
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Tax ServicesTax Services (1 of 2)(1 of 2)
Annotated servicesOrganized by IRC sectionUnited States Tax Reporter by RIAStandard Federal Tax Reporter by
CCH
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Tax ServicesTax Services (2 of 2)(2 of 2)
Topical services organized by topicFederal Tax Coordinator 2d by RIALaw of Federal Income Taxation
(Mertens) by West GroupTax Management Portfolios by BNACCH Federal Tax Service by CCH
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CitatorsCitatorsHistory of the caseList of other authorities that
have cited the case in questionFigure C1-5 summarizes how to use
a citator as part of the research process
CCH CitatorRIA Citator 2nd Series
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Computers as a Computers as a Research ToolResearch Tool
Computerized sources No findings list
Cross referencing facilitated by hyperlinksNo cumulative supplements
New developments integrated into main textPrimary sources accessible from
explanatory paragraphs via hyperlinksCitator symbols explicitly spelled out
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Statements on Statements on Standards for Tax Standards for Tax Services (SSTSs)Services (SSTSs)
Issued by AICPA Not legally enforceable
May be cited in a negligence lawsuit as “standard of care” for tax practitioners
Professionally enforceable by AICPAViolations could result in suspension or
loss of license
See Appendix E
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