Assume that you are a staff accountant in a small public accounting firm. Recently, another CPA in town died, and your firm acquired many new clients. One of the new clients Robert Tucci, is an individual who operates a pawn shop. Your manager, Bustuba, could not reconcile revenue from the QuickBooks accounts to the client$$s prior$-$year tax return. Bustuba discussed the issue with the client, and the client indicated that the portion of the shop$$s revenues that represented $$interest$$ on pawned items was reported on Schedule B of Form $1040.$ The other revenue items were reported on Schedule C$.$ This treatment has been used since $1985.$ The average amount of interest income during this period was $$35,000.$

Required: Prepare a tax file memorandum discussing the issues that you see. Include related cases ruled that may be considered a precedent and code sections applicable