TAX RESEARCH MEMO: U.S. TAX COURT ASSIGNMENT INSTRUCTIONS OVERVIEWFor this assignment, you will be submitting a tax research memo regarding the scenario detailed below. The memo will be due by 11:59 p.m. (ET) on Friday.
The memo should be submitted in the form of a Microsoft Word document, using only the template provided, and labeled as follows: lastname_memoTax Court.doc. The Relevant Facts, Specific Issues, and Conclusions sections of the memo should be thorough but concise. The key portion of the memo will be the Support section, which should be properly supported by appropriate regulation citations (be specific with section, number, paragraph, and subparagraph as applicable).
As this is a memo, and not a formal writing assignment, current edition APA format is not required. Furthermore, there is no need to submit a title page or research page. Just substitute “Your Firm” at the top of the memo with your full name.Prepare (in good form) a research memorandum to the file.
SCENARIO: Robert Jones has just rendered service for a taxpayer as an expert witness in a case heard by the U. S. Tax Court. The taxpayer is requesting reimbursement for Jones’ fees and for those amounts paid to her attorney in presenting the case. Jones’ billing rate for this type of engagement is $500 per hour, the market rate for such services in his city, plus out- of- pocket expenses (e. g., auto mileage, computer charges). How much of Jones’ fee will the taxpayer recover?
Note: Your assignment will be checked for originality via the Turnitin plagiarism tool.
TAX RESEARCH MEMO: U.S. TAX COURT ASSIGNMENT INSTRUCTIONS OVERVIEW For this assignment, you will be submitting a tax research memo regarding the scenario detailed below. The memo will be due by 11:5
ACCT 612 Tax Research Memo Template Your Firm Your Town and State Date Relevant Facts The 30-mile piece of rail will be repaired by the Pima and Southern Railroad (PSRR). Contractors who are interested have already submitted their offers to PSRR. The upgrading of the old track line will cost a sum of $12 million and out of that cost $5 million will be the cost of new track line, $3 million will cater for the cost of installing the line, $2 million is cost of grading the road bed and improvement while the cost of removing the old track will be $1.5 million. The value of the old track line is worthy $0.2 million as salvage. The upgraded track is predicted to last 35-40 years in Arizona. Specific Issues Casey Jones is interested in knowing whether cost of improvement of the track line will be capitalized or deducted. Casey Jones also wants to know if implementing uniform capitalization rules would present any challenge for PSRR. Conclusions Because the PSRR costs associated with upgrading the truck line are all indirect costs, rule §263A requires that all indirect costs be capitalized. As a result, all indirect costs of upgrading the track must be capitalized and cannot be deducted. This is because the costs were incurred during the pre-production stage and not during the actual production process. Support When it comes to the first question of whether to deduct or capitalize, PSRR has no choice except to capitalize the expense. §263A states that no deductions can be made for property improvement or betterment. Because the rebuilt track represents an improvement, the cost paid to improve the track cannot be deducted. This section of the law works in the opposite direction of Casey Jones’ expectations. Casey Jones’s second concern is the application of uniform capitalization rules. All pre-construction and pre-development costs must be capitalized, according to §263 uniform capitalization rules. The indirect costs that are exempt from being capitalized are those that are less than $200,000, however the indirect costs involved in improving the track in this case were more than $200,000. 26 CFR § 1.263(a)-1 – Capital expenditures; in general. Legal information Institute: Retrieved from https://www.law.cornell.edu/cfr/text/26/1.263(a)-1 Actions to Be Taken ________ Discuss with client. Date discussed ________ ________ Prepare a memo or letter to the client ________ Explore other fact situations ________ Other action. Describe:___________________________ _______________________________________________________ Preparer ________ Reviewer ________ Partner ________