How to write a memo
Use the IRAC method-Determine the facts then:
I-Issue (Question)
R-Rule (which rules apply)
A-Analysis
C-Conclusion
After the first draft, look back at the facts. Are more needed or is more research needed.
Code and regulations
Internal revenue code is a law enacted by congress-currently Internal revenue Code of 1986, as amended (“IRC”)
Regulations are issued by the treasury-the IRS
(Permanent, temporary and proposed)
Legislative or interpretive-but both are so well thought out that the courts grant deference so they will be hard to overturn in court
Tax Law
IRC is based on sections
Sec 61 gross income
Sec 162 business expense
Tax treaties are the law
Income Tax regulations are preceded with 1.
1.61-1 gross income
1.162-5 business expense other taxes, such as gift or estate are preceded with 20 or 25.
IRS audits
Random, based on form 1099 matching
IRS may audit and propose changes
If taxpayer and IRS agent cant agree
Can argue with supervisor (appeals)
90 day letter issued if no agreement taxpayer has 90 days to file in tax court if not, there is a final assessment
Often also penalties and interest
Appellate courts Supreme court court of appeals for taxpayers US court of appeals

US tax court US district court for taxpayers US court of federal claims

Tax services-How to find rules
Lexis-Nexis

CHAPTER 2

Tax return forms
Form 1040, 1040A, 1040EZ, 1040NR

FORMULA FOR INDIVIDUAL INCOME TAX

Income from whatever source derived
-minus exclusions
=gross income
-above the line deductions (deductions for adjusted gross income
=Adjusted gross income (the line or bottom of page 1)
-deduct greater of standard deduction or itemized, &
-deduct personal and dependency exemptions
=Taxable income
X times tax rate (tax table or schedule)=tax
+ Plus, additional taxes-AMT, S.E, Household employee
- Minus Credits and Prepayments
=Tax Payable or Refund Due

Standard Deduction

Varies based on:
Filings status (single, married separate or joint, Head of Household)
Plus extra for