Conducting tax research is a critical function of the tax profession. Using the information in Chapter 2 on tax authorities and tax research, please complete the exercises below (on pages 4 & 5). Always aim to use the highest tax authorities (IRC Code, primary sources) for your responses; however, relevant explanatory resources will be necessary to explain the code (the IRC is literally written in code that requires deciphering).

Follow the steps for tax research (pages 2-17 through 2-23 (LO 2-5)). Each person is required to complete #13, an Internal Research Memo to document their findings (use Exhibit 2-9 as a guide for writing the memo).

#13 Write an Internal Research Memo for each client selected above, documenting the results of your research. (See pages 2-17 through 2-23 & Exhibit 2-9 Internal Research Memo, for guidance).

Question:

Matt and Lori were divorced in 2016. Pursuant to the divorce decree Matt receives $10,000 of alimony each month. Use an available tax service to determine if the alimony Matt receives is taxable. Would your answer change if Matt and Lori still live together?