Taxation Research

COMMUNICATION OF TAX RESEARCH RESULTS

The five steps in tax research are:

• understand the facts

• identify issues

• locate relevant authorities

• analyze the tax authorities

• communicate research results.

The two types of tax services that tax professionals use in tax research are annotated tax services,

arranged by code section, and topical services, arranged by topic.

Research questions often consist of questions of fact or questions of law.

• The answer to a question of fact hinges upon the facts and circumstances of the

taxpayer's transaction.

• The answer to a question of law hinges upon the interpretation of the law, such as

interpreting a particular phrase in a code section.

When the researcher identifies that different authorities have conflicting views, she should

evaluate the “hierarchy,” jurisdiction, and age of the authorities.

Once the tax researcher has identified relevant authorities, she must make sure that the

authorities are still valid and up to date.

The most common end product of a research question is a research memo, which has five basic

parts: (1) facts, (2) issues, (3) authority list, (4) conclusion, and (5) analysis.

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.