ASSIGNMENT 2 FIT

Instructions

Sample Research Memo

Facts:   Discuss facts relevant to the question presented—that is, facts that provide necessary background of the transaction (generally, who, what, when, where, and how much) and those facts that may influence the research answer. Keeping the fact discussion relatively brief will focus the reader's attention on the relevant characteristics of the transaction.

Issues: State the specific issues that the memo addresses. This section confirms that you understand the research question, reminds the reader of the question being analyzed, and allows future researchers to determine whether the analysis in the memo is relevant. Issues should be written as specifically as possible and be limited to one or two sentences per issue.

Authorities: In this section, the researcher cites the relevant tax authorities that apply to the issue, such as the IRC, court cases, and revenue rulings. How many authorities should you cite? Enough to provide a clear understanding of the issue and interpretation of the law. Remember, in order to reach an accurate assessment of the strength of your conclusion, you should consider authorities that may support your desired conclusion, as well as those that may go against it.

Conclusion: There should be one conclusion per issue. Each conclusion should answer the question as briefly as possible, and preferably indicate why the answer is what it is.

Analysis: The goal of the analysis is for the researcher to provide the reader a clear understanding of the area of law and specific authorities that apply. Typically, an analysis will be organized to discuss the general area(s) of law first (the code section) and then the specific authorities (court cases, revenue rulings) that apply to the research question. How many authorities should you discuss? As many as necessary to provide the reader an understanding of the issue and relevant authorities. After you discuss the relevant authorities, apply the authorities to your client's transaction and explain how the authorities result in your conclusion.

Questions

Conduct tax research to address the following fact pattern:

A cash basis individual taxpayer has a freelance business by which he provides bookkeeping services.  On December 31, 2020, the client had a balance due to the taxpayer/freelancer for $500 for work performed in December 2020.  The client called the taxpayer on December 31, 2010 to let him know that the check for $500 was available for him to pick up to pay off his balance.  However, the taxpayer was busy with personal projects during the day.  The drive to pick up the check and return back home would have taken about 2-3 hours all together since he lives 60 miles away from the client and the traffic to the client's was usually heavy during the week.  Notwithstanding these facts, taxpayer had no severe restrictions that would have prevented him from picking up the check.  The taxpayer asked the client to mail the check to his home.  The client mailed the check to taxpayer's home on December 31st.  It was received by the taxpayer on January 5, 2021.

The taxpayer is putting together his tax records to prepare his taxes.  As he is preparing his taxes, he asked you, as the tax professional, on whether he should include the $500 as part of his 2020 tax year income taxes rather than report it on next year's taxes for 2021 since he received the check in calendar in 2021.

What would be your response to his inquiry?  Please provide legal authority either from the Internal Revenue Code or case law.  And describe how you went about to find support for your response.  Don't rely on Googling the answer.   The point of this exercise is to learn how to conduct proper legal research.