1. 1-1 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

2. 1-2 TAX RESEARCH (1 of 2)  Overview of tax research  Steps in the tax research process  Importance of facts to the tax consequences  Sources of tax law  Tax services ©2010 Pearson Education, Inc. Publishing as Prentice Hall

3. 1-3 TAX RESEARCH (2 of 2)  Citators  Internet as a research tool  Professional guidelines for tax services ©2010 Pearson Education, Inc. Publishing as Prentice Hall

4. 1-4 Overview of Tax Research (1 of 2)  Close-fact or tax compliance  Facts already occurred  Discovery of tax consequences  Proper disclosure ©2010 Pearson Education, Inc. Publishing as Prentice Hall

5. 1-5 Overview of Tax Research (2 of 2)  Open-fact or tax-planning  Before structuring or concluding a transaction  Minimization of taxes  Careful compliance permits legal avoidance of taxation ©2010 Pearson Education, Inc. Publishing as Prentice Hall

6. 1-6 Steps in the Tax Research Process (1 of 2)  Determine the facts  Identify the issues (questions)  Locate applicable authorities  Evaluate authorities  Choose which to follow when authorities conflict ©2010 Pearson Education, Inc. Publishing as Prentice Hall

7. 1-7 Steps in the Tax Research Process (2 of 2)  Analyze facts in terms of applicable authorities  Communicate conclusions and recommendations to client  Treas. Dept. Circular 230 covers all written advice communicated to clients ©2010 Pearson Education, Inc. Publishing as Prentice Hall

8. 1-8 Importance of the Facts to the Tax Consequences  Ambiguous situations (gray areas)  Facts are clear but the law is not  Law is clear but the facts are not  Advance planning permits facts to develop that produce favorable tax consequences ©2010 Pearson Education, Inc. Publishing as Prentice Hall

9. 1-9 Sources of Tax Law (1 of 2)  Legislative process  Internal Revenue Code  Treasury Regulations  Administrative pronouncements  Judicial decisions  Tax treaties  Tax periodicals ©2010 Pearson Education, Inc. Publishing as Prentice Hall

10. 1-10 Legislative Process  House Ways and Means Committee  Voted on by full House  Senate Finance Committee  Voted on by full Senate  Conference Committee  Voted by both full House and Senate  Signed or vetoed by President  Override veto by 2/3 vote by both houses ©2010 Pearson Education, Inc. Publishing as Prentice Hall

11. 1-11 Internal Revenue Code (IRC)  Title 26 of the United States Code enacted by Congress  Organization  Title  Subtitle  Chapter Subchapter - Part - Subpart - Section ©2010 Pearson Education, Inc. Publishing as Prentice Hall

12. 1-12 Treasury Regulations (1 of 3)  Treasury Dept. delegates authority to IRS to promulgate Treas. Regs.  Types of Treasury Regulations  Proposed: no authoritative weight  Temporary  Provide immediate guidance  Same authority as Final Regs.  Final ©2010 Pearson Education, Inc. Publishing as Prentice Hall

13. 1-13 Treasury Regulations (2 of 3)  Interpretative Regulations  Interpret related Code section  Less authority than IRC  Legislative Regulations  Almost the same authority as IRC  Legislative reenactment doctrine  Check date of Regs.  Law may have changed after written ©2010 Pearson Education, Inc. Publishing as Prentice Hall

14. 1-14 Treasury Regulations (3 of 3)  1.165-5  1 – Income tax  165 – IRC citation  5 – 5 th regulation  Subject matter  1 – Income tax  20 – Estate tax  25 – Gift tax  301 – Admin/procedural matters  601 – Procedural rules ©2010 Pearson Education, Inc. Publishing as Prentice Hall

15. 1-15 Administrative Pronouncements (1 of 5)  Revenue Rulings  More specific than Regs.  Less authority than Regs.  Revenue Procedures  IRS guidance on procedural matters ©2010 Pearson Education, Inc. Publishing as Prentice Hall

16. 1-16 Administrative Pronouncements (2 of 5)  Citation of Revenue Rulings and Procedures  Rev. Rul. (or Proc.) 97-4, 1997-1 C.B. 5  4 th 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

17. 1-17 Administrative Pronouncements (3 of 5)  Letter Rulings  Reply to specific taxpayer question  Only authority for specific taxpayer  Ltr. Rul. 200130006 (August 6, 2001)  2001 – year  30 – week  006 – 6 th letter ruling of the 30 th week ©2010 Pearson Education, Inc. Publishing as Prentice Hall

18. 1-18 Administrative Pronouncements (4 of 5)  Other interpretations  Technical Advice Memoranda  IRS advice to an IRS agent on technical matters  Issued to public in form of letter rulings  Information releases  Like press releases  Written in lay terms  Sent to newspapers ©2010 Pearson Education, Inc. Publishing as Prentice Hall

19. 1-19 Administrative Pronouncements (5 of 5)  Other interpretations (continued)  Announcements and notices  More technical than information releases  Address current tax developments  IRS bound by to follow  Just like Revenue Rulings and Procedures ©2010 Pearson Education, Inc. Publishing as Prentice Hall

20. 1-20 Judicial Decisions  Overview of court system  U.S. Tax Court  U.S. District Courts  U.S. Court of Federal Claims  U.S. Supreme court  Precedential value of various decisions ©2010 Pearson Education, Inc. Publishing as Prentice Hall

21. 1-21 Overview of Court System (1 of 2) ©2010 Pearson Education, Inc. Publishing as Prentice Hall Appellate Courts

22. 1-22 Overview of Court System (2 of 2) ©2010 Pearson Education, Inc. Publishing as Prentice Hall CircuitStates Included in Circuit 1 st ME, MA, NH, RI, PR 2 nd CT, NY, VT 3 rd DE, NJ, PA, VI 4 th MD, NC, SC, VA, WV 5 th LA, MS, TX 6 th KY, MI, OH, TN 7 th IL, IN, WI 8 th AR, IA, MN, MO, NE, ND, SD 9 th AK, AZ, CA, HI, ID, MT, NV, OR, WA, GU, MP 10 th CO, KS, NM, OK, UT, WY 11 th AL, FL, GA D.C.District of Columbia FederalAll Districts

23. 1-23 U.S. Tax Court (1 of 3)  Taxpayer does not pay deficiency before litigating case  No jury trial available  Regular and Memorandum decisions  Small Cases Procedure  Acquiescence policy ©2010 Pearson Education, Inc. Publishing as Prentice Hall

24. 1-24 U.S. Tax Court (2 of 3)  Regular decisions  First time court hears case  Memo decisions  Factual variations of previous cases  Small cases procedure  Cases of <$50,000 eligible  Less formal than regular tax court ©2010 Pearson Education, Inc. Publishing as Prentice Hall

25. 1-25 U.S. Tax Court (3 of 3)  Acquiescence policy  IRS announces whether or not it agrees with Tax Court decisions ©2010 Pearson Education, Inc. Publishing as Prentice Hall

26. 1-26 U.S. District Courts  May request a jury trial  Must pay deficiency first  Unreported decisions  Decisions not officially reported  Published by RIA and CCH ©2010 Pearson Education, Inc. Publishing as Prentice Hall

27. 1-27 U.S. Court of Federal Claims  No jury trial  Must pay deficiency first  Decisions appealable to Circuit Court of Appeals for the Federal Circuit ©2010 Pearson Education, Inc. Publishing as Prentice Hall

28. 1-28 Circuit Courts of Appeals  Losing party at trial level may appeal decision to appellate court  Circuit Courts of Appeals  Appeals from Tax Court & district courts  Based upon geography  Court of Appeals for the Federal Circuit  Appeals from U.S. Court of Federal Claims ©2010 Pearson Education, Inc. Publishing as Prentice Hall

29. 1-29 Supreme Court  Very few tax cases are heard  Hears cases when  Circuit courts are divided or  Issue of great importance  Same authority as IRC ©2010 Pearson Education, Inc. Publishing as Prentice Hall

30. 1-30 Precedential Value of Decisions ©2010 Pearson Education, Inc. Publishing as Prentice Hall

31. 1-31 Tax Services (1 of 2)  Annotated services  Organized by IRC section  United States Tax Reporter by RIA  Standard Federal Tax Reporter by CCH ©2010 Pearson Education, Inc. Publishing as Prentice Hall

32. 1-32 Tax Services (2 of 2)  Topical services organized by topic  Federal Tax Coordinator 2d by RIA  Tax Management Portfolios by BNA  CCH Federal Tax Service by CCH ©2010 Pearson Education, Inc. Publishing as Prentice Hall

33. 1-33Citators  History of the case  List of other authorities that have cited the case in question  Refer to Table 4 in book for list of terms describing status change in IRS rulings  CCH Citator  RIA Citator 2nd Series ©2010 Pearson Education, Inc. Publishing as Prentice Hall

34. 1-34 Internet as a Research Tool ©2010 Pearson Education, Inc. Publishing as Prentice Hall InformationCHECKPOINTCCH NETWORK Recent developmentsNewsstandMyCCH Primary & secondary sources Federal State and local reportersState & LocalState All int’l referencesInternational Estate taxEstate Planning Financial & Estate Planning Pension taxationPension & BenefitsPension & Payroll Payroll taxationPayrollPension & Payroll

35. 1-35 Professional Guidelines for Tax Services (1 of 2)  Treas. Dept. Circular 230  Pertains to all tax practitioners  Rules to practice before IRS  Guidance on written advice to taxpayers  Gives gov’t authority to impose fines for violations of rules ©2010 Pearson Education, Inc. Publishing as Prentice Hall

36. 1-36 Professional Guidelines for Tax Services (2 of 2)  AICPA SSTSs  Ethical framework for taxpayer/client relationship  High standards of care  No duty to verify client information if not suspicious ©2010 Pearson Education, Inc. Publishing as Prentice Hall

37. Comments or questions about PowerPoint Slides? Contact Dr. Richard Newmark at University of Northern Colorado’s Kenneth W. Monfort College of Business richard.newmark@PhDuh.com 1-37 ©2010 Pearson Education, Inc. Publishing as Prentice Hall