Chapter 2 Tax Research Methodology William A Raabe
Chapter 2 Tax Research Methodology William A. Raabe, Gerald E. Whittenburg& , Debra L. Sanders Copyright © 2006 Thomson South-Western, Mason, Ohio 1
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Step 1: Establish the Facts Gather all relevant facts n Irrelevant facts may become relevant later n n Constantly be aware that new facts may be needed as the research progresses 3
Significant Facts Client’s tax entity n Client’s personal (family) situation n Client’s marginal tax rates n Client’s legal domicile/citizen n Client’s motivation n Application of special tax status n Whether the transaction is proposed or has been completed n 4
Step 2: Identify the Issues n Fact issues n Concerned with information having an objective reality n n n Dates of transactions Amounts involved in the transaction Law issues n Unclear how law applies to factual issues: n n Possible conflict between Code sections No provision found that addresses the client’s specific issue 5
Step 2: Identify the Issues Simple situations can generate many research issues n New issues may arise when solving the original problem n 6
Step 3: Locate Authority n Primary Authority n n Statutory Administrative Judicial Secondary Authority (interpretations of primary authority) n n Tax services Tax journals Treatises Newsletters 7
Major Tax Services (Secondary Authority) 8
Selected Tax Journals (Secondary Authority) 9
Step 4: Evaluate Authority n Different authorities may suggest different treatments (e. g. , courts vs. IRS) n Different authorities have different precedential values 10
Step 5: Develop Conclusions & Recommendations n May have no single “best” alternative n n Alternatives must be considered Recommendations should include alternatives where appropriate 11
Step 6: Communicate the Recommendations n Memo to client file n n Include the facts, assumptions, issues, authorities, and recommendations Letter to client n Be certain to use clear language for client understanding 12
Overview of Computerized Tax Research Online systems and CD-ROM Systems n Benefits of using a computerized tax service n Factors in choosing a computerized tax service n Using a computer in tax research n IRS web site research n 13
Online Systems n Online tax research systems n n Accessible with a computer through the internet Documents may be printed or saved to computer 14
Online Tax Research RIA Checkpoint n CCH Tax Research Network n BNA n Lexis. Nexis n Westlaw n 15
CD-ROM Systems n CD-ROM tax research systems n Similar to online tax research systems except databases are stored on CD-ROMs instead of central computers that are accessible through the internet 16
Benefits of Using a Computerized Tax Service n n n Current law (updated daily) Create searches using key terms Hyperlinks allow ease of moving among documents Computer can quickly process large volume of material Cost effective 17
Using a Computer in Tax Research 1. State the issue as a question n 2. Identify the key words n 3. Construct a research query n 4. Select databases and execute the search n 5. Interpret and refine search n 18
Steps in the Computer Research Process 19
Selected RIA Check. Point Search Connectors 20
IRS Web Site Research IRS web site is not a full-service tax research site n Limited tax research can be conducted n n Contains searchable and downloadable tax information including: n Tax forms, n Instructions, n IRS publications, and n Other IRS information 21
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