MEMORANDUM #1 TO: Tax Associate FROM: Partner SUBJECT: Research Memorandum Facts: Our client performs bookkeeping work for her clients. She performs most of her client work at the client's office. She has about ten clients and spends about 4 hours per client each week at the client's office. She also has a dedicated office at her home where she does all of her administrative work for her business. The administrative work she performs is at her home office to include billing, record keeping, and training. Area of her home used for business - 500 square feet Total area of home 5,000 square feet Annual indirect costs o o Gross income from business - $100,000 o Deductible mortgage interest - $25,000 o Real estate taxes - $1,500 o Utilities - $2,500 Ignore depreciation for this assignment. . . o O Questions: 5. I also recall the IRS issuing guidance on this as well in a Revenue Procedure. Please cite the relevant Revenue Procedure. a. Explain in your own words how the Revenue Procedure differs from the law. b. Please attach the revenue ruling and highlight important aspects of the ruling. MEMORANDUM #1 TO: Tax Associate FROM: Partner SUBJECT: Research Memorandum Facts: Our client performs bookkeeping work for her clients. She performs most of her client work at the client's office. She has about ten clients and spends about 4 hours per client each week at the client's office. She also has a dedicated office at her home where she does all of her administrative work for her business. The administrative work she performs is at her home office to include billing, record keeping, and training. Area of her home used for business - 500 square feet Total area of home 5,000 square feet Annual indirect costs o o Gross income from business - $100,000 o Deductible mortgage interest - $25,000 o Real estate taxes - $1,500 o Utilities - $2,500 Ignore depreciation for this assignment. . . o O Questions: 5. I also recall the IRS issuing guidance on this as well in a Revenue Procedure. Please cite the relevant Revenue Procedure. a. Explain in your own words how the Revenue Procedure differs from the law. b. Please attach the revenue ruling and highlight important aspects of the ruling