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Chapter 16Chapter 16
Tax ResearchTax Research
©2007 South-Western©2007 South-Western©2007 South-Western©2007 South-Western
Kevin MurphyKevin MurphyMark HigginsMark Higgins
Kevin MurphyKevin MurphyMark HigginsMark Higgins
Transparency 16-2Transparency 16-2© 2007 South-Western© 2007 South-Western
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
al le
vel
App
ella
te le
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