13. Barbara Brown calls you on the phone. She says that she has found a 1991 letter ruling that agrees with a position she wishes 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 Barbara.
14. Sammie is considering writing the IRS to determine whether a retirement plan main- tained by an association of churches qualifies as a church plan under § 414(e). Outline some relevant tax issues Sammie faces in making this decision.
15. What are the major differences between letter rulings and determination letters? 16. What are the differences between Technical Advice Memoranda (TAMs) and Technical
Expedited Advice Memoranda (TEAMs)?
17. Caleb receives a 90-day letter after his discussion with an appeals officer. He is not satisfied with the $92,000 settlement offer. Identify the relevant tax research issues facing Caleb.
18. Which of the following would be considered advantages of the Small Cases Division of the Tax Court?
a. Appeal to the U.S. Tax Court is possible.
b. A hearing of a deficiency of $65,000 is considered on a timely basis.
c. Taxpayer can handle the litigation without using a lawyer or certified public accountant.
d. Taxpayer can use other Small Cases Division decisions for precedential value. e. The actual hearing is conducted informally.
f. Travel time will probably be reduced.
19. List an advantage and a disadvantage of using the U.S. District Court as the trial court for Federal tax litigation.
20. Dwain Toombs is considering litigating a tax deficiency of approximately $311,000 in the court system. He asks you to provide him with a short description of his alternatives indicating the advantages and disadvantages of each. Prepare your response to Dwain in the form of a letter. His address is 200 Mesa Drive, Tucson, AZ 85714.
21. List an advantage and a disadvantage of using the U.S. Court of Federal Claims as the trial court for Federal tax litigation.
22. 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.
23. Suppose the U.S. Government loses a tax case in the U.S. District Court but does not appeal the result. What does the failure to appeal signify?
24. Because the U.S. Tax Court is a national court, it always decides the same issue in a consistent manner. Assess the validity of this statement.
25. For the U.S. Tax Court, U.S. District Court, and U.S. Court of Federal Claims, indicate the following:
a. Number of regular judges per court. b. Availability of a jury trial.
c. Whether the deficiency must be paid before the trial.
26. In which of the following states could a taxpayer appeal the decision of a U.S. District Court to the Ninth Circuit Court of Appeals?
a. Alaska. b. Arkansas. c. Florida. d. New York. e. South Carolina. Communications Issue ID Issue ID Communications
27. 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.
28. What is the Supreme Court’s policy on hearing tax cases?
29. 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 (e) except that the IRS has issued a nonacquiescence as to the result. 30. In the citation Florence H. Griffith, 35 T.C. 882 (1961), what do the 35 and the 882 refer to? 31. What is the difference between a Regular decision, a Memorandum decision, and a
Summary Opinion of the U.S. Tax Court?
32. Referring to the citation only, determine which court issued these decisions: a. Peterson v. Comm., 380 F.2d 1 (CA–9, 1967).
b. E-Z Sew Enterprises, Inc. v. U.S., 260 F.Supp. 100 (D.Ct. Mich., 1966). c. H. M. Stevens v. Comm., 353 U.S. 909 (1956).
33. Interpret each of the following citations: a. 54 T.C. 1514 (1970). b. 408 F.2d 1117 (CA–2, 1969). c. 69–1 USTC ¶9319 (CA–2, 1969). d. 23 AFTR2d 69–1090 (CA–2, 1969). e. 293 F.Supp. 1129 (D.Ct. Miss., 1967). f. 67–1 USTC ¶9253 (D.Ct. Miss., 1967). g. 19 AFTR2d 647 (D.Ct. Miss., 1967). h. 56 S.Ct. 289 (USSC, 1935). i. 36–1 USTC ¶9020 (USSC, 1935). j. 16 AFTR 1274 (USSC, 1935). k. 422 F.2d 1336 (Ct.Cls., 1970). 34. Explain the following abbreviations:
a. CA–2. f. Cert. denied. k. F.3d.
b. Fed.Cl. g. acq. l. F.Supp.
c. aff’d. h. B.T.A. m. USSC.
d. rev’d. i. USTC. n. S.Ct.
e. rem’d. j. AFTR. o. D.Ct.
35. 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.
36. Where can you locate a published decision of the U.S. Court of Federal Claims? 37. Which of the following items can probably be found in the Cumulative Bulletin?
a. Action on Decision.
b. Small Cases Division of the U.S. Tax Court decision. c. Letter ruling.
e. Finalized Regulation.
f. U.S. Court of Federal Claims decision. g. Senate Finance Committee Report. h. Acquiescences to Tax Court decisions.
i. U.S. Circuit Court of Appeals decision.
38. A client walks into Pauline’s office and asks a question about child support payments that she cannot answer without further research. Identify some relevant research steps that Pauline may take to obtain a possible answer.
39. Where can a researcher find the current Internal Revenue Code of 1986?
40. Which of the following would be considered differences between the Research Institute of America and Commerce Clearing House citators?
a. Distinguishes between the various issues in a particular court decision. b. Lists all court decisions that cite the court decision being researched. c. Allows a researcher to determine the validity of a Revenue Ruling.
d. Indicates whether a court decision is explained, criticized, followed, or overruled by a subsequent decision.
e. Pinpoints the exact page on which a decision is cited by another case.
41. 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 some 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?
42. Define the following terms: a. Golsen rule.
b. Small Cases Division of the U.S. Tax Court. c. Writ of Certiorari.
d. Tax evasion.
43. In general, most tax research can now be conducted and conclusions reached by using materials available on the Internet. Assess the validity of this statement.
Problems
44. Tom, an individual taxpayer, has just been audited by the IRS and, as a result, has been assessed a substantial deficiency (which has not yet been paid) in additional income taxes. In preparing his defense, Tom advances the following possibilities:
a. Although a resident of Kentucky, Tom plans to sue in a U.S. District Court in Oregon that appears to be more favorably inclined toward taxpayers.
b. If (a) is not possible, Tom plans to take his case to a Kentucky state court where an uncle is the presiding judge.
c. Since Tom has found a B.T.A. decision that seems to help his case, he plans to rely on it under alternative (a) or (b).
d. If he loses at the trial court level, Tom plans to appeal either to the U.S. Court of Federal Claims or to the U.S. Second Circuit Court of Appeals because he has relatives in both Washington, D.C., and New York. Staying with these relatives could save Tom lodging expense while his appeal is being heard by the court selected. e. Whether or not Tom wins at the trial court or appeals court level, he feels certain
of success on an appeal to the U.S. Supreme Court.
Evaluate Tom’s notions concerning the judicial process as it applies to Federal income tax controversies.
Issue ID
45. Using the legend provided, identify the governmental unit that produces the following tax sources:
Legend
T = U.S. Treasury Department NO = National Office of the IRS AD = Area Director of the IRS NA = Not applicable
a. Proposed Regulations. b. Revenue Procedures. c. Letter rulings. d. Determination letters.
e. Technical Advice Memoranda. f. Treasury Decisions.
g. Revenue Rulings.
h. Small Cases Division decisions.
46. Using the legend provided, classify each of the following statements (more than one answer per statement may be appropriate):
Legend D = Applies to the U.S. District Court
T = Applies to the U.S. Tax Court
C = Applies to the U.S. Court of Federal Claims A = Applies to the U.S. Circuit Court of Appeals U = Applies to the U.S. Supreme Court
N = Applies to none of the above
a. Decides only Federal tax matters. b. Decisions are reported in the F.3d Series. c. Decisions are reported in the USTCs. d. Decisions are reported in the AFTRs.
e. Appeal is by Writ of Certiorari.
f. Court meets most often in Washington, D.C. g. A jury trial is available.
h. Trial court. i. Appellate court.
j. Appeal is to the Federal Circuit and bypasses the taxpayer’s particular circuit court. k. Has a Small Cases Division.
l. The only trial court where the taxpayer does not have to pay the tax assessed by the IRS first.
47. Using the legend provided, classify each of the following citations as to the type of court: Legend
T = Applies to the U.S. Tax Court D = Applies to the U.S. District Court
C = Applies to the U.S. Court of Federal Claims A = Applies to the U.S. Circuit Court of Appeals U = Applies to the U.S. Supreme Court
a. 388 F.2d 420 (CA–7, 1968). b. 79 T.C. 7 (1982). c. 54 S.Ct. 8 (USSC, 1933). d. 3 B.T.A. 1042 (1926). e. T.C.Memo. 1954–141. f. 597 F.2d 760 (Ct.Cl., 1979). g. Ltr.Rul. 9414051. h. 465 F.Supp. 341 (D.Ct. Okla., 1978). i. Rev.Rul. 99–1.
48. Using the legend provided, classify each of the following tax sources:
Legend
P = Primary tax source S = Secondary tax source B = Both
N = Neither
a. Sixteenth Amendment to the Constitution. b. Tax treaty between the United States and France. c. Revenue Ruling.
d. General Counsel Memoranda (1989). e. U.S. District Court decision.
f. Tax Notes article.
g. Temporary Regulations (issued 2003). h. U.S. Tax Court Memorandum decision.
i. Small Cases Division of the U.S. Tax Court decision. j. Senate Finance Committee report.
49. Using the legend provided, classify each of the following citations as to publisher:
Legend
RIA = Research Institute of America CCH = Commerce Clearing House
W = West Publishing Company U.S. = U.S. Government
O = Others a. 103 T.C. 80. b. 69 TCM 3042. c. 839 F.Supp. 933. d. 56 AFTR2d 85–5926. e. 92–1 USTC ¶50,186. f. RIA T.C.Mem.Dec. ¶80,582. g. Rev.Proc. 92–16, 1992–1 C.B. 673. h. Rev.Proc. 77–37, 1977–2 C.B. 568. i. 110 S.Ct. 589. j. 493 U.S. 203.
50. Using the legend provided, classify each of the following statements:
Legend
A = Tax avoidance E = Tax evasion N = Neither
a. Terry writes a $250 check for a charitable contribution on December 28, 2004, but does not mail the check to the charitable organization until January 10, 2005. She takes a deduction in 2004.
b. Robert decides not to report interest income from a bank because the amount is only $11.75.
c. Jim pays property taxes on his home in December 2004 rather than waiting until February 2005.
d. Jane switches her investments from taxable corporate bonds to tax-exempt munici- pal bonds.
e. Ted encourages his mother to save most of her Social Security benefits so that he will be able to claim her as a dependent.
Research Problems
Note: Solutions to Research Problems can be prepared by using the RIA Checkpoint®Student Editiononline research product, which is available to accompany this text. It is also possible to prepare solutions to the Research Problems by using tax research materials found in a standard tax library.
Research Problem 1. What does California Federal Life Insurance Co., 680 F.2d 85 (CA–9, 1982), say about gold coins?
Research Problem 2. Determine what is covered in the following subchapters in Chapter 1, Subtitle A of the Internal Revenue Code of 1986:
a. B. b. D. c. F. d. K.
e. P.
Research Problem 3. Locate the following items and give a brief summary of the results. a. Charles Y. Choi, T.C.Memo. 2002–183.
b. Ltr.Rul. 200231003.
c. Action on Decision 2000–004, May 10, 2000.
Research Problem 4. Determine how the term person is defined in the Internal Revenue Code of 1986. Specify the Code Section in which the term is defined.
Research Problem 5. Find the article in the March 2003 issue of the Journal of Taxation about “work product.” Give the author and full title, and fill in the missing words: “It is sufficient that some type of adversarial proceeding, even if short of _________ ___________ litigation, is expected.”
Research Problem 6. What do acquiescence, acquiescence in result only, and nonacquiescence mean? What position did the IRS take with respect to Zabolotny v. Comm., 7 F.3d 774 (CA–8, 1993)?
Research Problem 7. Locate the following tax services in your library and indicate the name of the publisher and whether the service is organized by topic or Code Section: a. United States Tax Reporter.
b. Standard Federal Tax Reporter. c. Federal Tax Coordinator 2d.
d. Mertens Law of Federal Income Taxation. e. Tax Management Portfolios.
f. Federal Income, Gift and Estate Taxation. g. Federal Tax Service.
Research Problem 8. In the tax publications matrix below, place an X if a court decision can be found in the publication. There may be more than one X in a row for a particular court.
Research Problem 9. Complete the following citations: a. Figgie International, Inc., T.C.Memo. 1985– . b. S. Morton, 38 BTA (1938).
c. Northern Coal & Dock Co., 12 T.C. (1949). d. Winn-Dixie Stores, Inc., 254 F.3d (CA–11, 2001).
e. Rev.Rul. 59– , 1959–2 C.B. 87. f. Upjohn Co. v. U.S., 449 U.S. (1981). g. In re Sealed Case, 737 F.2d 94 ( , 1984).
Research Problem 10. Find and brief the following decisions:
a. Terrell Equipment Co., Inc., T.C.Memo. 2002–217.
b. Gleckman v. U.S., 80 F.2d 394 (CA–5, 1935), cert. den. 297 U.S. 709 (1936).
Research Problem 11. Determine the disposition of the following decisions:
a. Kimbell-Diamond Milling Co., 14 T.C. 74 (1950). b. U.S. v. Catto, 223 F.Supp. 663 (W.D. Tex., 1963). c. Schuster’s Express, Inc., 66 T.C. 588 (1976).
Research Problem 12. Determine the reliability of the following items:
a. Fior D’Italia, Inc., 242 F.3d 844 (CA–9, 2001). b. Rev.Proc. 70–21, 1970–2 C.B. 501.
c. Miller v. U.S., 38 F.3d 473 (CA–9, 1994).
Research Problem 13. During 2004, Frank lived with and supported a 20-year-old woman
who was not his wife. He resides in a state that has a statute that makes it a misdemeanor for a man and woman who are not married to each other to live together. May Frank claim his friend as a dependent assuming he satisfies the normal tax rules for the deduction? Should Frank consider moving to another state?
Partial list of research aids: § 152(b)(5).
John T. Untermann, 38 T.C. 93 (1962).
S.Rept. 1983, 85th Cong., 2d Sess., reprinted in the 1958 Code Cong. & Adm. News 4791, 4804.
Use the tax resources of the Internet to address the following questions. Do not restrict your search to the World Wide Web, but include a review of newsgroups and general reference materials, practitioner sites and resources, primary sources of the tax law, chat rooms and discussion groups, and other opportunities.
U.S.
Govt. Federal
Printing Federal Federal Claims BTA T.C.
Court Office Supp.2d 3d Reporter S.Ct. Memo. T.C.Memo. AFTR Memo. USTC
U.S. Supreme Court Circuit Court of Appeals Court of Federal Claims District Court
Tax Court (Regular decisions)
Tax Court (Memo decisions) Board of Tax Appeals BTA Memo
West Publishing Company
Research Institute of America Commerce Clearing House Decision Making Internet Activity
Research Problem 14. Go to each of the following Internet locations:
a. Several primary sources of the tax law, including the U.S. Supreme Court, a Circuit Court of Appeals, the Internal Revenue Service, and final Regulations.
b. Sources of proposed Federal tax legislation. c. A collection of tax rules for your state.
Research Problem 15. Go to the U.S. Tax Court Internet site:
a. What different types of cases can be found on the site? b. What is a Summary Opinion? Find one.
c. What is a Memorandum Opinion? Find one. d. Find the “Rules and Practices and Procedures.”