Richard is a management consultant who specializes in strategic planning for businesses.
FACTS
1. During the last five months of 2021, Richard had a contract to do work for a major client, Binglebongle Manufacturing. The contract stipulated that the company would pay the majority of his fees at the conclusion of the engagement.
2. On December 31, 2021 Richard and the client went to lunch. The client was very pleased with the work Richard had done and wanted to give him a check for his services.
3. Because Richard had received a large amount of income in 2021, he asked the client to mail him the check instead. He told the client that Binglebongle Manufacturing would still get the deduction, but he himself would not have to claim the income until the next year.
4. Richard received the check in early January and included the amount in his 2022 income.
5. In 2024 the IRS audited Richard for unreported income.
a.Binglebongle Manufacturing had issued a Form 1099-MISC showing that the company made the payment in 2021.
b.Richard tried to explain to the IRS that the income was not includable on his return until 2022, because he was a cash-basis taxpayer and did not receive the payment until 2022.
c.Although it took the IRS agent some time to come up with the results of his examination, he eventually submitted an examination report that shifted the 2022 income to 2021.
6. Richard felt that he had complied with the law and did not agree with the revenue agent.
a.He filed a protest to the IRS 30-day letter and asked for an appeals conference.
b.Appeals agreed with the IRS agent, but Richard was not deterred.
c.Richard went to Tax Court in May of 2026.
d.The Court ruled that since Richard received the income in 2021, it was taxable in that year.
7. Since the Court had not ruled in his favor for 2021, Richard felt that he should be able to get a refund from the IRS for the amount that he had included in his 2022 income.
a.He filed Form 843, Claim for Refund and Request for Abatement.
b.The IRS denied the claim request because the statute of limitations had expired on the 2022 tax return.
8. Richard was frustrated with what appeared to be an inconsistency in the tax law. He contacted a CPA, who told him that the IRS was correct: When Richard filed his claim in May of 2026, the 2022 tax-year statute of limitations expiration date of April 15th had already passed.
You are to write a memorandum to answer question#2,
QUESTIONS
1.In determining if this taxpayer is entitled to a refund based on the facts in this case, what code section(s) apply to the determination?
2.What do these code sections provide?
3.Are there tests that have to be met? If so what are they?
4.Does Richard meet them, and will he win? What is the support for your answer?
Tax Research Memo
Sample Format
Your Firm
Your Town and State
Date
Relevant Facts
This section should summarize the important facts of the research case. Only
include the relevant facts in a clear and concise manner.
Specific Issues
Identify the issue(s) and state the issue(s) in the form of a question.
Conclusions
Think of your conclusion as the “short” answer to your issue. The conclusion
section is the place to provide tax advice, recommend action(s) for the client to take,
or identify the need for additional information. There may not be a single “best”
alternative to the client’s issue so be sure to consider all applicable alternatives.
Support your conclusion by referencing back to the authority you discussed in the
discussion and analysis section.
Support
This section discusses the issue(s). Begin with the relevant code section(s).
Identify the code section, paraphrase what it says and then discus why it’s
important. Discussion of the relevant Treasury Regulations should follow. Identify the
regulation, paraphrase the important sections, and then address the importance of
the regulation given the facts.
The discussion
should continue by
reviewing relevant Treasury
pronouncements (Revenue Rulings, Revenue Procedures, Letter Rulings, etc.) and
cases. Be sure to include complete cite for each authority. Summarize the important
facts for the pronouncement/case and then compare the facts of the
pronouncement/case to the research facts. Discuss how the facts are similar or
different. Explain how each ruling or case supports or weakens the clients’ position.
Documentation is a very important part communicating tax research and all
statements or opinions should be substantiated with supporting cites. Supporting
cites should be to primary sources only except in rare or unusual situations.
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Formatting
Title Page
Citation
Outline
