Discussion Questions
1. LO.1 A large part of tax research consists of determining what?
2. LO.1 Why do taxpayers often have more than one alternative for structuring a business transaction?
3. LO.1 Where does the Federal tax legislation generally originate?
4. LO.2, 5 Butch Bishop operates a small international firm named Tile, Inc. A new treaty between the United States and Spain conflicts with a Section of the
Internal Revenue Code. Butch asks you for advice. If he follows the treaty position, does he need to disclose this on his tax return? If he is required to disclose, are there any penalties for failure to disclose? Prepare a letter in which you respond to Butch.
Tile’s address is 100 International Drive, Tampa, FL 33620.
5. LO.1, 2 Interpret this Regulation citation: Reg. § 1.163–10(a)(2).
6. LO.1 In the citation Notice 90–20, 1990–1 C.B. 328, to what do the 20 and the 328 refer?
7. LO.1, 4 Rank the following items from the lowest to highest authority in the Federal tax law system:
a. Interpretive Regulation.
b. Legislative Regulation.
c. Letter ruling.
d. Revenue Ruling.
e. Internal Revenue Code.
f. Proposed Regulation.
8. LO.1 Interpret each of the following citations:
a. Temp.Reg. § 1.956–2T.
b. Rev.Rul. 2012–15, 2012–23 I.R.B. 975.
c. Ltr.Rul. 200204051.
9. LO.1, 5 Sally Andrews calls you on the phone. She says that she has found a 2007 letter ruling that agrees with a position she wants to take on her tax return.
She asks you about the precedential value of a letter ruling. Draft a memo for the tax files outlining what you told Sally.
10. LO.1 Where may private letter rulings be found?
11. LO.1 Dwain receives a 90-day letter after his discussion with an appeals officer. He is not satisfied with the $101,000 settlement offer. Identify the relevant tax research issues facing Dwain.
12. LO.1 List an advantage and a disadvantage of using the U.S. Court of Federal
Claims as the trial court for Federal tax litigation.
13. LO.1, 5 Eddy Falls is considering litigating a tax deficiency of approximately $229,030 in the court system. He asks you to provide himwith a short description of his alternatives, indicating the advantages and disadvantages of each. Prepare your response to
Eddy in the form of a letter. His address is 200 Mesa Drive, Tucson, AZ 85714.
14. LO.1 List an advantage and a disadvantage of using the U.S. Tax Court as the trial court for Federal tax litigation.
15. LO.1 A taxpayer lives in Michigan. In a controversy with the IRS, the taxpayer loses at the trial court level. Describe the appeal procedure under the following different assumptions:
a. The trial court was the Small Cases Division of the U.S. Tax Court.
b. The trial court was the U.S. Tax Court.
c. The trial court was a U.S. District Court.
d. The trial court was the U.S. Court of Federal Claims.
16. LO.1 What is meant by the term petitioner?
17. LO.1 A taxpayer living in the following states would appeal a decision of the U.S.
District Court to which Court of Appeals?
a. Wyoming.
b. Nebraska.
c. Idaho.
d. Louisiana.
e. Illinois.
18. LO.1 What precedents must each of these courts follow?
a. U.S. Tax Court.
b. U.S. Court of Federal Claims.
c. U.S. District Court.
19. LO.1 What determines the appropriate Circuit Court of Appeals for a particular taxpayer?
20. LO.1, 4 In assessing the validity of a prior court decision, discuss the significance of the following on the taxpayer’s issue:
a. The decision was rendered by the U.S. District Court of Wyoming. Taxpayer lives in Wyoming.
b. The decision was rendered by the U.S. Court of Federal Claims. Taxpayer lives in Wyoming.
c. The decision was rendered by the Second Circuit Court of Appeals. Taxpayer lives in California.
d. The decision was rendered by the U.S. Supreme Court.
e. The decision was rendered by the U.S. Tax Court. The IRS has acquiesced in the result.
f. Same as part (e) except that the IRS has issued a nonacquiescence as to the result.
21. LO.2 In the citation Schuster’s Express, Inc., 66 T.C. 588 (1976), aff’d 562 F.2d 39 (CA–2, 1977), nonacq., to what do the 66, 39, and nonacq. refer?
22. LO.2 Is there an automatic right to appeal to the U.S. Supreme Court? If so, what is the process?
23. LO.2 Referring to the citation only, determine which court issued these decisions.
a. 716 F.2d 693 (CA–9, 1983).
b. 92 T.C. 400 (1998).
c. 70 U.S. 224 (1935).
d. 3 B.T.A. 1042 (1926).
e. T.C.Memo. 1957–169.
f. 50 AFTR2d 92–6000 (Ct. Cl., 1992).
g. Ltr.Rul. 9046036.
h. 111 F.Supp.2d 1294 (S.D.N.Y., 2000).
i. 98–50, 1998–1 C.B. 10.
24. LO.2 Interpret each of the following citations:
a. 14 T.C. 74 (1950).
b. 592 F.2d 1251 (CA–5, 1979).
c. 95–1 USTC {50,104 (CA–6, 1995).
d. 75 AFTR2d 95–110 (CA–6, 1995).
e. 223 F.Supp. 663 (W.D. Tex., 1963).
25. LO.2 Give the Commerce Clearing House citation for the following courts:
a. Small Cases Division of the Tax Court.
b. Federal District Court.
c. U.S. Supreme Court.
d. U.S. Court of Federal Claims.
e. Tax Court Memorandum decision.
26. LO.2 Where can you locate a published decision of the U.S. Court of Federal Claims?
27. LO.3 For her tax class, Yvonne has to prepare a research paper discussing the tax aspects of child support payments. Explain to Yvonne how she can research this topic using various tax research resources.
28. LO.4 Where can a researcher find the current Internal Revenue Code of 1986?
29. LO.2, 4 You inherit a tax problem that was researched five months ago. You believe the answer is correct, but you are unfamiliar with the general area.
How would you find recent articles dealing with the subject area? How do you evaluate the reliability of the authority cited in the research report? How do you determine the latest developments pertaining to the research problem?
30. LO.6 What is the primary purpose of effective tax planning? Explain.
31. LO.7 Describe simulation questions on the CPA exam.