2. Communicating Research Results Chapter 10

3. Communicating Research Results “……… communication truly occurs only when the message desired to be sent by the speaker or writer is received by the intended audience.” (Raabe, Whittenburg, Bost and Sanders, West’s Federal Tax Research (5 th), 2000, South-Western Publishing, 330.)

4. The File Memo Purpose Organize Facilitate Review Facilitate Subsequent Examination Subsequent update (Refer to Exhibit in Chapter 10)

5. The File Memo (cont’d) 1. Identification 2. Facts 3. Issue 4. Conclusion 5. Analysis 6. Summary

6. The File Memo (cont’d) 1. Identification –Date (very important) –To: (Client) File –Preparer –Re: (Client problem) 2. Facts – brief description of all pertinent facts (this means your client’s factual situation). –Everything that will potentially influence the outcome, especially in case of litigation. –Disclose facts you consider to be pivotal.

7. The File Memo (cont’d) 3. Issues - identify all issues – accurate identification is extremely important. If you have the wrong issue, you will conclude with the wrong answer – not to mention the embarrassment. Include IRC §§.

8. The File Memo (cont’d) 3. Issue (cont’d) Formulate the issue (discussed previously): –Is it a question of deductibility, recognition, taxable? –If so, what kind of outlay (or other) is it? –What is the nature of the outlay that places its status in doubt? –Is it a business expense, page 2, other? –Do you already know the controlling IRC §

9. The File Memo (cont’d) 3. Issue (cont’d) Is the $1,000 payment to Vendor on February 22 deductible? – will get you nowhere Is the purchase of a processor at a cost of $1,000 deductible as a business expense? – better Is the $1,000 purchase of a processor deductible as a business expense under IRC §162? – better, if you already know the controlling IRC § Is the $1,000 purchase of a processor deductible as a business expense under IRC §162, or must it be capitalized under IRC §263A? - better

10. The File Memo (cont’d) 3. Issue (cont’d) Does the $1,000 cost of a processor qualify as a deduction under IRC §179? –Much depends upon how much you already know about the controlling law, if any, when you begin your search –To begin with, some key works might be – processor – deductible - capitalize

11. The File Memo (cont’d) 4. Conclusion – review6. Summary (below) briefly state your conclusion on all issues, e.g., deductible, not deductible, inconclusive. (don’t be wish-washy; be firm with support, generally in Summary) (All brief, but complete)

12. The File Memo (cont’d)  5. Analysis  Include all pertinent authorities identified, both pro and con.  General order: 1. Statute3. Rulings 2. Regulations4. Cases  Properly state cite for each authority. If it is a court decision, be sure to identify the court.  Emphasis – Always defend your position with reliable authorities, with complete citation

13. The File Memo (cont’d) 5. Analysis (cont’d) Compare the facts in each of the authorities with those of your client; consider any similarities /dissimilarities, and whether they are favorable or unfavorable to your situation. Disclose both the strengths and weaknesses. Why the weaknesses?

14. The File Memo (cont’d)  5. Analysis (cont’d)  Evaluate the interplay among the various authorities, including their sources  Compare the consistencies and inconsistencies among the authorities. Explore to determine the reasons.  Look for the pivotal factor leading to the decision in the case. Is it favorable or unfavorable to your client?  Don’t forget to recognize the holding of each authority.

15. The File Memo (cont’d) 5. Analysis (cont’d) BE SURE YOUR CITE IS ACCURATE / COMPLETE (discussed earlier – see Exhibit B: Standard Tax Citations

16. The File Memo (cont’d) 6. Summary – after reviewing / comparing all your authorities, pros and cons, strengths and weaknesses, summarize.

17. The File Memo (cont’d) TREAT YOUR FILE MEMO AS A MATH PROBLEM: –(facts + law) ÷ authoritative analysis (both pro and con, and including court decisions) = conclusion –BE SPECIFIC – DO NOT DISCUSS IN GENERALITIES –BE SURE TO ISOLATE THE “DETERMATIVE” FACTS

18. DOES IT “FLOW?” DOES IT MAKE SENSE

19. Court Case Brief Refer to Exhibit in Chapter 5 Purpose – many court cases are very lengthy, difficult to read and analyze. A brief will assist you and your colleagues in recalling the details of the case in the future without another complete review and analysis. Here, you are simply summarizing what the Court said, the Court’s analysis, in your own words, for future recall.

20. Court Case Brief (cont’d) Refer to Exhibit in Chapter 5. CITATION – complete citation. ISSUE(S) – briefly state the issues as identified the Court. FACTS – briefly state all facts considered by the Court in reaching it’s decision. Attempt to isolate the pivotal facts, those that swayed the court. HOLDING – state the court’s holding. ANALYSIS – analyze all the above, as the court did in coming to it’s decision. Include pivotal facts.

21. Paper Grading Standard Point Discount: Failure of 1. Format 2. Complete/concise statement of facts 3. Correct identification/description of issue 4. Identification of IRC § and or Reg §, or IRC § stated, but incorrect 5. Identification of all appropriate authorities 5a. Proper standard citation for each citation 6. Proper assessment of each authority 7. Valid/supported summary and conclusion on the issue

22. Questions?