1) Here is the research problem:

Research Problem Handout: Mr. Amos and Mrs. Susan Smith

Amos is a computer consultant, and his office is located in Orange, California. He and his wife, Susan, used their Lear jet, which they had purchase for $2 million, to travel to their timber farm in Oregon (10 trips), to their Tahiti property (2 trips), to computer symposia (5 trips), and to Park City, Utah (8 trips). The timber farm is operated in a businesslike fashion. Amos and Susan have spent nearly $2 million remodeling the Tahiti house and related property. They travel to Tahiti twice a year and stay there for several weeks each time. They travel to Park City to go skiing. The annual costs of operating the Lear jet, including depreciation, are $700,000 (assume $200,000 of this is depreciation).

On their tax return, Amos and Susan deducted the $700,000 as a business expense under 162. An IRS agent countered that this expense was not ordinary and necessary or that it was personal expense. Therefore, she disallowed the deduction. Evaluate the positions taken by Amos and Susan and by the IRS agent with respect to the Lear jet deduction.

You will address three issue in this research 1) Ordinary, 2) Necessary, 3) Reasonable.

2) You need to do a research history; do a word document type in all the steps that you do before using Commerce Clearing House, then after you are done with your research, click on the history button and copy and paste into your word document what you did in Commerce Clearing House. Then continue typing what you did after researching Commerce Clearing House. Make sure thatyou use the Citator tool for the Kurzet case. Tell me know you know the case is still good law. Make sure you are using the Kurzet appellate case.

Please note the footnotes.

Footnote 4, Welch v. Helvering (ordinary)

Footnote 5, Welch v. Helvering (necessary)

Footnote 6, Deputy v. DuPont (ordinary)

Footnote 11, Comm. v. Lincoln Electric (reasonable)

The above cases with Code sections 162 and 212 and Kurzet 2000-2 USTC paragraph 50,671 will be your research sources.

Once you have determined the position that you will recommend to the client, you are to prepare a memorandum to your boss. The memorandum is to contain the following components:

Statement of Facts- it is necessary to restate the relevant facts, in order to make sure that the situation you have researched is the same as the situation that your boss/client/friend asked you to research. Be sure to include the statement that if the facts change the outcome would be different.

Identification of Tax Question(s)/Issue(s)- state the specific question(s) to be researched

Authority- be sure to givecompletecitations for your authorities. One possible approach to this section is to give a summary of each of the authorities you are using. When appropriate, state the relative weights of the authorities cited. Again we only cite primary authority.

Reasoning

Reasoning is where you apply the law to your facts and then state what would be the outcome based on the law and previous applicable cases. Here is where you tie the facts of that situation into your case and conclusion. Make sure that you have provided a logical analysis!(make sure that it is easy to tell what authority is and what is your reasoning!)Do not come to any conclusions without including the authority supporting your conclusion which is stated in the previous section.

Conclusions- answer the tax questions you identified! "Yes," "No," and "It depends" are all good ways to start. Do not hide your basic answer! Also, include recommends to your client or tax planning opportunities. No new information should be added here. This is a summary of what you said in the rest of you memo.