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Writing Tax Tax file memorandum Memos Tax professionals often must document and communicate their tax research.
Clear written communication is important since tax planning ideas or IRS audits can cause prior tax returns to be amended or adjusted long after originally filed.
The tax professional may have long since forgotten the reasons for his or her research conclusions, so it is essential that the relevant tax authorities and rationales be thoroughly documented and clearly explained.
In some cases, the tax professionals who prepared the research memo may no longer be with the firm, increasing the importance of written communication that others can follow easily. Writing a tax research memo is an art. Tax professionals do not universally use the same techniques.
Generally, the more time taken to prepare a research memo, the less time necessary to review it. On this web page, we Tax file memorandum primarily on the communication aspects of tax research. After reviewing these communication principles, please read the fact scenario that we provide for practice, complete the research, and write a research memo following the lesson guidelines.
Then, compare your memo with the example research memowhich illustrates and applies the method we recommend. Organize the Research Memo Tax research memos should contain features allowing reviewers to read and understand their contents quickly. Organization is the key ingredient.
Under the method we recommend, the research memo contains two parts: The main text is the portion the researcher writes and consists of facts, issues, conclusions, and analyses.
We refer to the main text as Section A of the memo. The support materials, which are essentially attachments to Section A, are primary sources of the tax law e. We refer to the support materials as Section B. All pages in Section A contain certain uniform features.
Not only does this information provide ease of reference, but it allows pages that become separated to be reunited with the correct file or research memo. In addition, the preparer should date and initial all pages in Section A e.
The date allows the reviewer to know when the research was completed. Among other things, the exact date permits the reviewer to determine whether the research preceded or succeeded a change in the tax law e.
Initialing each page allows the reviewer to know who was responsible for the research, especially if questions should arise or clarifications are needed later. Pages in both Sections A and B should be numbered, and the number should appear in the same location on each page to provide ease of reference e.
To distinguish between pages in different sections of the research memo, page numbers should include two parts--a section number and the page within that section. Thus, the pages of written analysis might be numbered A-1, A-2, A-3, etc.
Similarly, each page of support materials could be numbered B-1, B-2, B-3, etc. The paging system should be logical, understandable, and expandable. To be understandable, the system should not be unnecessarily complex. To be expandable, the system should allow for additional pages to be added later without renumbering existing pages.
For example, if two pages must be inserted later between pages B-6 and B-7, they could be numbered B-6a and B-6b. Generally, pages should not be numbered until the research project is thought to be complete. Numbering pages prematurely especially in Section B may require frequent and unnecessary expansions, complicating the paging and cross-reference system.
Support material in Section B should be arranged in order of authoritative weight. For example, the relevant Code sections should appear first in Code section orderfollowed by regulations also in Code section order.
In this case, paging for Reg. After the last regulation, all judicial decisions should appear highest courts first and most recent dates first within each courtfollowed by all revenue rulings cited most recent rulings first. Organizing the authoritative support in this logical order allows the reviewer to locate a particular source quickly, especially when the reviewer wishes to check for or review authoritative support before reading Section A.
For example, the reviewer may know that Malat v.
Listing authoritative support in a logical order mitigates the desirability or necessity to include a table of contents or similar guide to the support materials in Section B, especially when this section is lengthy.
As with other parts of Section A, a heading should precede this part to clearly identify and set off the facts.Tax Memorandum Essay Words | 5 Pages.
therefore subject to tax) in the year in which it’s received. Conclusion: Peaceful should pay the audit based on the facts. Tax Memorandum additional tax planning advice to ask of you.
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