ACCOUNTING 315

TAX RESEARCH PROJECT #2

SPRING 2018

INSTRUCTIONS:

2. Write a Research Memorandum to convey your conclusions. Make sure you prepare a Research Memorandum NOT a Client Letter.

3. The memo must be in proper form:

- A concise statement of pertinent facts.

- An identification of all tax issues (include list of authorities used).

- Your conclusions.

- A thorough discussion of the reasoning (analysis) upon which your conclusions are based.

- Citations, in proper form, to all primary authority relied on in reaching your conclusion,

e.g., code sections, reg. sections, court case, revenue ruling, etc.

4. Any primary authority discussed in your memorandum must be tied into the facts of this particular assignment. Do not merely recite the law without explicitly relating it to the facts at issue.

5. Secondary authority may NOT be cited in your memorandum. It should only be used to help you find relevant primary authority.

6. Your memorandum must be typed. Your paper must be double-spaced.

7. Your grade will be based on the following:

- How well you performed the research, e.g., did you locate, cite, and discuss the

relevant law.

- The quality of your written communication.

- The quality of your discussion of the issues.

- Your conclusions.

8. At a minimumyour memorandum should cite:

Two Internal Revenue Code sections.

Two court cases (at least one of the cases should be a circuit court case). Since you are not being given residence information, you may use a circuit court case from any circuit.

One other primary source, e.g., revenue ruling, revenue procedure, notice, etc. Do not use another case or Internal Revenue Code section for this requirement.

TAXPAYER INFORMATION

You are a senior manager of a large public accounting firm. One of your clients, Sam Sellit, recently called you for some tax advice.

Sam is a salesperson for Panoramic Pools, a construction company that builds and sells prefabricated swimming pools. The company operates several franchises throughout the United States. Sam has progressed to become the top salesperson for the franchise where he is employed. Sam has done so well that he is considering purchasing his own franchise. This year he contacted the regional office about the possibility of opening up his own shop. The vice president in charge of expansion, Greg Grow, suggested that the two of them meet at the companys annual meeting of franchises, held in Orlando, Florida. Greg knew that Sam, although not a franchisee, would be attending because he was the top salesperson in his office, and the company invites the top salesperson from each office as well as his or her spouse to attend the meeting.

While at the four-day meeting (Tuesday through Friday) in Orlando, Sam and his wife, Sue, met with Greg and discussed the potential venture. In addition, Greg allowed Sam and Sue to attend the parts of the meeting that were only for franchisees so that they could get a glimpse of how the company operated. Of course, while they were in Orlando, Sam and his wife visited all of the tourist attractions. On Tuesday, there were no meetings scheduled and everyone spent the day at Disney World and Epcot Center. On Thursday afternoon, no meetings were scheduled and the couple went with Greg and his wife to Sea World. Sam attended meetings for several hours on Friday while his wife played golf. The couple stayed over through Sunday and continued their sightseeing activities. The company picked up the tab for the couples trip, reimbursing Sam $3,500 which included the cost of air fare, meals, lodging, and entertainment.

Sam wants to know if the $3,500 payment he received is considered taxable income to him. If any of the $3,500 is taxable, Sam also wants to know if he will be allowed any offsetting deductions for the expenses he incurred.

Please research the issue(s) and write a Research Memorandum detailing the results of your research.