1. Chapter 15
Tax Research 1

2. Learning Objectives Describe the steps in the tax research process
Explain how the facts affect the tax results
Identify the sources of tax law and understand the authoritative value of each
Consult the tax services to research an issue 2

3. Learning Objectives Use a citator to assess authorities
Grasp the basics of computerized tax research
Understand guidelines to which CPAs in tax practice should follow
Prepare work papers and communications to clients 3

4. Client-oriented Tax Research
Closed fact or tax compliance situations
Least amount of flexibility
Facts established
Best solution within predetermined constraints
• Open-fact or tax planning situations
help client structure transaction to reach his/her objective 4

5. Steps In Tax Research Process
DETERMINE THE FACTS
ANALYZE THE FACTS IN TERMS OF THE APPLICABLE AUTHORITIES
IDENTIFY THE ISSUES
COMMUNICATE YOUR
CONCLUSIONS &
RECOMMENDATIONS
TO INTERESTED PARTY
LOCATE THE
APPLICABLE
AUTHORITIES
ASSESS & EVALUATE THE
AUTHORITIES 5

6. How Do Facts Affect Tax Results?
Facts guide the issues and questions
In order to answer questions, must consult many sources
Interpretations 6

7. Typical Misconception
Many taxpayers think tax law is all black and white; most tax research deals with gray areas, previous findings, & interpretation 7

8. The Sources Of Tax Law
Statutory
Judicial
Administrative 8

9. Authoritative Value Of Tax Law Sources
The Internal Revenue Code which constitutes Title 26 of the Federal Statutes is the foundation of all tax law 9

10. Organizational Scheme Of The Internal Revenue Code
Title 26. All matters concerned with taxation
Subtitle A. Income taxes
Chapter 1. Normal taxes and surtaxes
Subchapter A. Determination of tax liability
Part 1. Tax on individuals
Sec. 1. Tax imposed
Scheme for sections, subsections, etc
Sec. 165 (h) (2) (A) (i) (ii)
Section
Paragraph clauses
Subparagraph
Subsection 10

11. Authoritative Value Of Tax Law Sources
Treasury Regulations
Proposed regulations
Temporary regulations
Final regulations
The Treasury Dept. issues regulations as interpretations of the statute 11

12. Authoritative Value Of Tax Law Sources
Interpretative and statutory regulations
Interpretative regulations are issued under the general authority of Sec. 7805
Statutory regulations are written in situations where congress delegates its rule-making duties to the treasury. Usually this happens when congress feels it lacks the expertise to deal with a highly technical matter 12

13. Authoritative Value Of Tax Law Sources
Regulations (continued)
Citations
Number General Subject Matter
1 Income tax
20 Estate tax
25 Gift tax
301 Administrative &
Procedural matters
601 Procedural rules 13

14. Example Of Citation Regulation Sec. 1.165 - 5 Fifth
Income tax code section regulation 14

15. Authoritative Value Of Tax Law Sources
Authoritative weight
The presumption is that final regulations have the same authoritative weight as statutes
In addressing the validity of regulations, courts often apply the legislative reenactment doctrine 15

16. Administrative Interpretations
Revenue Rulings
Revenue Procedures
Letter Rulings
Other Interpretations
Technical advice memoranda
Information releases
Announcements and notices 16

17. Overview of the court system
Judicial Decisions
Overview of the court system
Trial
Courts
Appellate Courts
US COURT OF
FEDERAL CLAIMS
TAX
COURT
US DISTRICT COURT
FOR THE TAXPAYER’S
DISTRICT
COURT OF APPEALS
FOR FEDERAL CIRCUIT
COURT OF APPEALS FOR
TAXPAYER’S GEOGRAPHICAL
JURISDICTION
US SUPREME COURT 17

18. Tax Services United States Tax Reporter Standard Federal Tax Reporter
Federal Tax Coordinator 2d
Law of Federal Income Taxation
Tax Management Portfolios
CCH Federal Tax Service
CCH Citator 18

19. Citators Purpose Give history of a case
List other authorities that have cited the case in question 19

20. Types Of Citators Commerce Clearinghouse Citator
History of case may be easier to find
Citator of judicial decisions included at no extra charge
• Research Institute of America Citator 2nd Series
conveys more information
specific issue in case
referenced cases whether favorable, unfavorable, distinguished 20

21. Computers As A Research Tool
Legal Data Bases
ACCESS by Commerce Clearinghouse
LEXIS by Mead Data Central
WESTLAW by West Publishing 21

22. Statements on Standards for Tax Services (SSTSs)
Issued by AICPA:
Recommend appropriate standards......And promote uniform application by CPAs
To encourage the development of increased understanding of the responsibilities of CPAs by the Treasury Department and IRS
Foster increased public understanding of, compliance with, and confidence in our tax system 22

23. Other SSTSs From AICPA Use client’s estimates, when reasonable
Inform the client of errors
Do not inform the IRS of errors without client’s permission, except when required by law 23

24. Work Papers And Communication With Clients
Written communication and documentation recommended in important, unusual, or complicated transactions
Format in terms of process - steps of tax research
Each firm has it’s way of doing things 24