Chapter 16 Tax Research ©2007 South-Western Kevin Murphy Mark Higgins Kevin Murphy Mark Higgins

Transparency 16-2 © 2007 South-Western Introduction Tax research is the process by which the tax consequences of a completed or proposed transaction are determined.

Transparency 16-3 © 2007 South-Western Tax Authorities uThere are two classes of tax authorities FPrimary VAuthoritative law and writings of the three branches of the federal government: legislative, executive, and judicial FSecondary VSupporting materials which provide interpretation of the primary authorities

Transparency 16-4 © 2007 South-Western Primary Authorities: Legislative uU.S. Constitution FArticle 1, Section 7 FSixteenth Amendment uInternal Revenue Code of 1986 (the Code) FStatutory language FLegislative intent uTax treaties

Transparency 16-5 © 2007 South-Western How a Bill Becomes Law House Ways & Means Committee Senate Finance Committee House of Representatives Senate Joint Conference Committee President

Transparency 16-6 © 2007 South-Western Primary Authorities: Executive/Administrative uTreasury Regulations FInterpretive versus Legislative FProposed, temporary, and final uRevenue Rulings and Procedures uAcquiescence and Non-acquiescence uLetter Rulings FBefore or after the action uOther IRS Pronouncements FMemorandums FNotices, announcements, publications, instructions

Primary Authorities: Judicial U.S. Supreme Court U.S. Courts of Appeals U.S. Court of Appeals for the Federal Circuit U.S. Tax Court U.S. District Court U.S. Court of Federal Claims Small claims division of U.S. Tax Court Trial level Appellate level

Transparency 16-8 © 2007 South-Western Citations to Primary Authorities uReferences made to a primary authority should include a full citation uExamples are Internal Revenue CodeSec. 108 Treasury RegulationReg. Sec Revenue RulingRev. Rul , C.B. 108 U.S. Tax Court CaseJulian S. Danenberg, 73 T.C. 370 (1979)

Transparency 16-9 © 2007 South-Western Secondary Authorities: Tax Services uTax services fall into two categories FServices with limited editorial discussion but many short interpretive comments VCCH’s Standard Federal Tax Reporter VRIA’s United States Tax Reporter FServices with extensive editorial discussion and interpretation of the law VRIA’s Federal Tax Coordinator 2d VBNA’s Tax Management Portfolios VMerten’s Law of Federal Income Taxation

Transparency © 2007 South-Western Secondary Authorities: Others uComputer assistance tools are used to speed research FLEXIS & WESTLAW FInternet access FCD-ROM uCitators are used to determine the history of a judicial decision uTax Periodicals are used to keep up with current developments

Transparency © 2007 South-Western Types of Research uTax Compliance Research FFacts are known FGoal is to determine the consequence of a completed transaction uTax Planning Research FFacts are open-ended FGoal is to structure a future transaction for taxpayer’s advantage FNon-tax factors must be considered

Transparency © 2007 South-Western Tax Research Process uDetermine the facts and establish relevance uDetermine the issue(s) uLocate and evaluate the relevant authorities FAssess the importance of each FUnderstand the hierarchy of weight uReach a conclusion and communicate the results

Transparency © 2007 South-Western End of Chapter 16