Performing tax research is an important part of tax practice. As outlined in Chapter 2 of your

textbook, tax law is developed through a number of different governmental entities. Congress

enacts the tax Code as statutory law. The Treasury Department is tasked with the

implementation of the tax Code and, in the course of doing so, develops a number of

documents and materials to aid taxpayers in understanding the Treasury Department's

interpretation of the code, including the Regulations. In turn, the Internal Revenue Service

("IRS?) has the direct responsibility for implementing the tax Code and in assessing and

collecting the applicable tax from taxpayers. In the course of its duties, it also develops a

number of materials, including Revenue Rulings, Revenue Procedures, and Private Letter

Rulings, in which it sets forth its understanding of the tax laws. Finally, the federal courts

decide tax cases in which taxpayers contest the government's interpretation of the tax laws. In

deciding these cases, the federal courts set forth binding interpretation of what the tax laws

provide. All of these materials (often called primary resources) are important resources in

performing tax research. On top of these primary sources of tax law, there are a number of

secondary materials provided by various organizations and publishers. These secondary

materials offer editorial analysis of the tax laws (somewhat akin to a Cliffs? Notes on tax laws)

to help tax practitioners understand the tax laws and apply them in given situations.

Just as with the first project that was submitted in Week 3, the following assignment has three

(3) different graded elements. Two of them require you to prepare tax file memoranda, while

the remaining element requires you to compose an essay answering the question asked. AS

SUCH, YOU WILL BE SUBMITTING THREE SEPARATE DOCUMENTS FOR THIS ASSIGNMENT.

1. The first two assignments require you to compose tax file memoranda. In each of these

problems, you will be given a fact pattern or issue that requires you to decide or analyze

a particular issue of tax law. You will also be provided with a number of the primary

sources discussed above (e.g., Revenue Rulings, cases) on that issue of tax law. You will

then compose a tax file memoranda concerning that taxpayer. You can find details as to

how to compose such a memorandum in Chapter 2 of your text, including a sample text

file memorandum in Figure 2.6 on page 2-26 of your text. Use the materials provided to

determine the proper solution to the taxpayer?s issues. In particular, discuss the

materials in some detail in the ?Analysis? section of the tax file memorandum. THIS IS

IMPORTANT! The most important part of any tax file memorandum is the thoroughness

of the analysis defending the conclusion reached in the memorandum. Accordingly,

most of the points awarded on the assignment are allocated to the ?Analysis? section of

the memorandum. In assessing these assignments, consideration will be given to,

among other factors, (1) your accuracy in summarizing the relevant facts; (2) the

accuracy of your identification and statement of the ?Issue? presented by the problem;

(3) the accuracy of your ?Conclusion;? (4) the thoroughness and quality of your analysis

Week 7 Research Project (Set #1)

DeVry University Acct 429

offered in the ?Analysis? section of your memorandum; and (5) the overall

professionalism of your memorandum (e.g., presentation, use of proper grammar,

proper spelling, and quality of communication). EACH OF THE TAX MEMORANDA IS

WORTH 30 POINTS, FOR A TOTAL OF 60 POINTS.

2. The remaining assignment requires you to perform some research on the Internet to

find relevant materials and to analyze these materials. As previously noted, in

performing this research, you may not take advantage of any resources other than those

specifically permitted by the assignment, including assignments previously completed by

other students or other similar materials. You will then complete an essay answering

the question or questions presented by this assignment. Your submission will be graded

on a number of factors, including (1) your ability to locate relevant research and

materials on the Internet; (2) your ability to analyze these resources; (3) your ability to

draw conclusions from these resources and to defend these conclusions with analysis of

the research and materials located; and (4) the overall professionalism and content of

your essay (e.g., presentation, use of proper grammar, proper spelling, and quality of

communication). THIS ESSAY IS WORTH 20 POINTS.

Please note that these assignments are worth a significant portion of your grade. As such, you

should take them seriously, and leave yourself enough time to complete them. Do not wait

until the last weekend to begin these assignments. If you do, it will be very difficult for you to

submit quality responses to each of the four questions or problems posed. Please also note

that preparing these answers conscientiously will help you in preparing for the final

examination, given that you may be required to perform similar analyses on the exam. Should

you have a question, please ask your instructor. Good luck!

Week 7 Research Project (Set #1)

DeVry University Acct 429

TAX RESEARCH MEMORANDUM ASSIGNMENT 1

As we learned in Week 4, the Code allows taxpayers to take a deduction for the cost of meals

when taxpayers have been deemed to be "away from home" for tax purposes. This

determination can be difficult. Two separate clients came to you with questions as to whether

they are entitled to take a deduction for the cost of meals incurred during a particular trip. The

facts pertaining to each are:

1. Tracey is a sales representative for a national pharmaceutical company. She has a

rather large sales territory, and she makes her rounds to her customers using a

company-owned car over a 16- to 19-hour period of time. During these one-day

business trips, Tracey will pull over in a suitable location (such as a park or a rest

stop) and take a short nap in the backseat of her automobile.

2. Mark captains a ferryboat. This ferryboat carries tourists on roundtrips from Seattle

to Victoria and back, each trip of which lasts from 15 to 17 hours and provides for a

6- to 7-hour layover in Victoria. During the layover, Mark typically takes a four-hour

nap on a cot that he has stored in the pilothouse of the ferryboat.

Under each of these circumstances, if the taxpayer entitled to deduct the cost of meals

purchased during the trip at issue?

COMPOSE A TAX FILE MEMORANDUM CONCERNING THIS ISSUE FOR BOTH TAXPAYERS USING

THESE FACTS AND THE RESEARCH MATERIALS PROVIDED TO YOU IN THE NEXT FEW PAGES (30

POINTS).

Checkpoint Contents

Federal Library

Federal Source Materials

Code, Regulations, Committee Reports & Tax Treaties

Internal Revenue Code

Current Code

Subtitle A Income Taxes 1-1563

Chapter 1 NORMAL TAXES AND SURTAXES 1-1400U-3

Subchapter B Computation of Taxable Income 61-291

Part VI ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS 161-199

162 Trade or business expenses.

Internal Revenue Code

162 Trade or business expenses.

(a) In general.

There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the

taxable year in carrying on any trade or business, including?

(1) a reasonable allowance for salaries or other compensation for personal services actually rendered;

(2) traveling expenses (including amounts expended for meals and lodging other than amounts which are

lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or

business; and

(3) rentals or other payments required to be made as a condition to the continued use or possession,

for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking

title or in which he has no equity.

For purposes of the preceding sentence, the place of residence of a Member of Congress (including any

Delegate and Resident Commissioner) within the State, congressional district, or possession which he

represents in Congress shall be considered his home, but amounts expended by such Members within each

taxable year for living expenses shall not be deductible for income tax purposes in excess of $3,000. For

purposes of paragraph (2) , the taxpayer shall not be treated as being temporarily away from home during any

period of employment if such period exceeds 1 year. The preceding sentence shall not apply to any Federal

employee during any period for which such employee is certified by the Attorney General (or the designee

thereof) as traveling on behalf of the United States in temporary duty status to investigate or prosecute, or

provide support services for the investigation or prosecution of, a Federal crime.

(b) Charitable contributions and gifts excepted.

No deduction shall be allowed under subsection (a) for any contribution or gift which would be allowable as a

deduction under section 170 were it not for the percentage limitations, the dollar limitations, or the

requirements as to the time of payment, set forth in such section.

(c) Illegal bribes, kickbacks, and other payments.

(1) Illegal payments to government officials or employees.

No deduction shall be allowed under subsection (a) for any payment made, directly or indirectly, to an

official or employee of any government, or of any agency or instrumentality of any government, if the

payment constitutes an illegal bribe or kickback or, if the payment is to an official or employee of a

foreign government, the payment is unlawful under the Foreign Corrupt Practices Act of 1977. The

burden of proof in respect of the issue, for the purposes of this paragraph, as to whether a payment

constitutes an illegal bribe or kickback (or is unlawful under the Foreign Corrupt Practices Act of 1977)

shall be upon the Secretary to the same extent as he bears the burden of proof under section 7454

(concerning the burden of proof when the issue relates to fraud).

(2)

WEEK 7 RESEARCH PROJECT (Set #1) ACCT 429 DeVry University IMPORTANT NOTE TO STUDENTS This assignment is being distributed solely for your use in completing the Week 7 project in DeVry University's online Accounting 429 class. This assignment is an individual assignment, and you are to complete it without any outside assistance by any other student, individual, or outside materials, other than those specifically permitted by the problem. Any violations of these requirements will be addressed as an academic integrity violation. Similarly, this assignment may not be shared with any other student at any time, even after your completion of the course. Students to do so may be subject to sanctions pursuant to DeVry's academic integrity policy, even though they may no longer be enrolled in Accounting 429. Week 7 Research Project (Set #1) DeVry University Acct 429 Performing tax research is an important part of tax practice. As outlined in Chapter 2 of your textbook, tax law is developed through a number of different governmental entities. Congress enacts the tax Code as statutory law. The Treasury Department is tasked with the implementation of the tax Code and, in the course of doing so, develops a number of documents and materials to aid taxpayers in understanding the Treasury Department's interpretation of the code, including the Regulations. In turn, the Internal Revenue Service ("IRS\") has the direct responsibility for implementing the tax Code and in assessing and collecting the applicable tax from taxpayers. In the course of its duties, it also develops a number of materials, including Revenue Rulings, Revenue Procedures, and Private Letter Rulings, in which it sets forth its understanding of the tax laws. Finally, the federal courts decide tax cases in which taxpayers contest the government's interpretation of the tax laws. In deciding these cases, the federal courts set forth binding interpretation of what the tax laws provide. All of these materials (often called primary resources) are important resources in performing tax research. On top of these primary sources of tax law, there are a number of secondary materials provided by various organizations and publishers. These secondary materials offer editorial analysis of the tax laws (somewhat akin to a Cliffs' Notes on tax laws) to help tax practitioners understand the tax laws and apply them in given situations. Just as with the first project that was submitted in Week 3, the following assignment has three (3) different graded elements. Two of them require you to prepare tax file memoranda, while the remaining element requires you to compose an essay answering the question asked. AS SUCH, YOU WILL BE SUBMITTING THREE SEPARATE DOCUMENTS FOR THIS ASSIGNMENT. 1. The first two assignments require you to compose tax file memoranda. In each of these problems, you will be given a fact pattern or issue that requires you to decide or analyze a particular issue of tax law. You will also be provided with a number of the primary sources discussed above (e.g., Revenue Rulings, cases) on that issue of tax law. You will then compose a tax file memoranda concerning that taxpayer. You can find details as to how to compose such a memorandum in Chapter 2 of your text, including a sample text file memorandum in Figure 2.6 on page 2-26 of your text. Use the materials provided to determine the proper solution to the taxpayer's issues. In particular, discuss the materials in some detail in the \"Analysis\" section of the tax file memorandum. THIS IS IMPORTANT! The most important part of any tax file memorandum is the thoroughness of the analysis defending the conclusion reached in the memorandum. Accordingly, most of the points awarded on the assignment are allocated to the \"Analysis\" section of the memorandum. In assessing these assignments, consideration will be given to, among other factors, (1) your accuracy in summarizing the relevant facts; (2) the accuracy of your identification and statement of the \"Issue\" presented by the problem; (3) the accuracy of your \"Conclusion;\" (4) the thoroughness and quality of your analysis Week 7 Research Project (Set #1) DeVry University Acct 429 offered in the \"Analysis\" section of your memorandum; and (5) the overall professionalism of your memorandum (e.g., presentation, use of proper grammar, proper spelling, and quality of communication). EACH OF THE TAX MEMORANDA IS WORTH 30 POINTS, FOR A TOTAL OF 60 POINTS. 2. The remaining assignment requires you to perform some research on the Internet to find relevant materials and to analyze these materials. As previously noted, in performing this research, you may not take advantage of any resources other than those specifically permitted by the assignment, including assignments previously completed by other students or other similar materials. You will then complete an essay answering the question or questions presented by this assignment. Your submission will be graded on a number of factors, including (1) your ability to locate relevant research and materials on the Internet; (2) your ability to analyze these resources; (3) your ability to draw conclusions from these resources and to defend these conclusions with analysis of the research and materials located; and (4) the overall professionalism and content of your essay (e.g., presentation, use of proper grammar, proper spelling, and quality of communication). THIS ESSAY IS WORTH 20 POINTS. Please note that these assignments are worth a significant portion of your grade. As such, you should take them seriously, and leave yourself enough time to complete them. Do not wait until the last weekend to begin these assignments. If you do, it will be very difficult for you to submit quality responses to each of the four questions or problems posed. Please also note that preparing these answers conscientiously will help you in preparing for the final examination, given that you may be required to perform similar analyses on the exam. Should you have a question, please ask your instructor. Good luck! Week 7 Research Project (Set #1) DeVry University Acct 429 TAX RESEARCH MEMORANDUM ASSIGNMENT 1 As we learned in Week 4, the Code allows taxpayers to take a deduction for the cost of meals when taxpayers have been deemed to be "away from home" for tax purposes. This determination can be difficult. Two separate clients came to you with questions as to whether they are entitled to take a deduction for the cost of meals incurred during a particular trip. The facts pertaining to each are: 1. Tracey is a sales representative for a national pharmaceutical company. She has a rather large sales territory, and she makes her rounds to her customers using a company-owned car over a 16- to 19-hour period of time. During these one-day business trips, Tracey will pull over in a suitable location (such as a park or a rest stop) and take a short nap in the backseat of her automobile. 2. Mark captains a ferryboat. This ferryboat carries tourists on roundtrips from Seattle to Victoria and back, each trip of which lasts from 15 to 17 hours and provides for a 6- to 7-hour layover in Victoria. During the layover, Mark typically takes a four-hour nap on a cot that he has stored in the pilothouse of the ferryboat. Under each of these circumstances, if the taxpayer entitled to deduct the cost of meals purchased during the trip at issue? COMPOSE A TAX FILE MEMORANDUM CONCERNING THIS ISSUE FOR BOTH TAXPAYERS USING THESE FACTS AND THE RESEARCH MATERIALS PROVIDED TO YOU IN THE NEXT FEW PAGES (30 POINTS). Checkpoint Contents Federal Library Federal Source Materials Code, Regulations, Committee Reports & Tax Treaties Internal Revenue Code Current Code Subtitle A Income Taxes 1-1563 Chapter 1 NORMAL TAXES AND SURTAXES 1-1400U-3 Subchapter B Computation of Taxable Income 61-291 Part VI ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS 161-199 162 Trade or business expenses. Internal Revenue Code 162 Trade or business expenses. (a) In general. There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including (1) a reasonable allowance for salaries or other compensation for personal services actually rendered; (2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and (3) rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity. For purposes of the preceding sentence, the place of residence of a Member of Congress (including any Delegate and Resident Commissioner) within the State, congressional district, or possession which he represents in Congress shall be considered his home, but amounts expended by such Members within each taxable year for living expenses shall not be deductible for income tax purposes in excess of $3,000. For purposes of paragraph (2) , the taxpayer shall not be treated as being temporarily away from home during any period of employment if such period exceeds 1 year. The preceding sentence shall not apply to any Federal employee during any period for which such employee is certified by the Attorney General (or the designee thereof) as traveling on behalf of the United States in temporary duty status to investigate or prosecute, or provide support services for the investigation or prosecution of, a Federal crime. (b) Charitable contributions and gifts excepted. No deduction shall be allowed under subsection (a) for any contribution or gift which would be allowable as a deduction under section 170 were it not for the percentage limitations, the dollar limitations, or the requirements as to the time of payment, set forth in such section. (c) Illegal bribes, kickbacks, and other payments. (1) Illegal payments to government officials or employees. No deduction shall be allowed under subsection (a) for any payment made, directly or indirectly, to an official or employee of any government, or of any agency or instrumentality of any government, if the payment constitutes an illegal bribe or kickback or, if the payment is to an official or employee of a foreign government, the payment is unlawful under the Foreign Corrupt Practices Act of 1977. The burden of proof in respect of the issue, for the purposes of this paragraph, as to whether a payment constitutes an illegal bribe or kickback (or is unlawful under the Foreign Corrupt Practices Act of 1977) shall be upon the Secretary to the same extent as he bears the burden of proof under section 7454 (concerning the burden of proof when the issue relates to fraud). (2) Other illegal payments. No deduction shall be allowed under subsection (a) for any payment (other than a payment described in paragraph (1) ) made, directly or indirectly, to any person, if the payment constitutes an illegal bribe, illegal kickback, or other illegal payment under any law of the United States, or under any law of a State (but only if such State law is generally enforced), which subjects the payor to a criminal penalty or the loss of license or privilege to engage in a trade or business. For purposes of this paragraph, a kickback includes a payment in consideration of the referral of a client, patient, or customer. The burden of proof in respect of the issue, for purposes of this paragraph, as to whether a payment constitutes an illegal bribe, illegal kickback, or other illegal payment shall be upon the Secretary to the same extent as he bears the burden of proof under section 7454 (concerning the burden of proof when the issue relates to fraud). (3) Kickbacks, rebates, and bribes under medicare and medicaid. No deduction shall be allowed under subsection (a) for any kickback, rebate, or bribe made by any provider of services, supplier, physician, or other person who furnishes items or services for which payment is or may be made under the Social Security Act, or in whole or in part out of Federal funds under a State plan approved under such Act, if such kickback, rebate, or bribe is made in connection with the furnishing of such items or services or the making or receipt of such payments. For purposes of this paragraph, a kickback includes a payment in consideration of the referral of a client, patient, or customer. (d) Capital contributions to Federal National Mortgage Association. For purposes of this subtitle, whenever the amount of capital contributions evidenced by a share of stock issued pursuant to section 303(c) of the Federal National Mortgage Association Charter Act ( 12 U.S.C., Sec. 1718 ) exceeds the fair market value of the stock as of the issue date of such stock, the initial holder of the stock shall treat the excess as ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. (e) Denial of deduction for certain lobbying and political expenditures. (1) In general. No deduction shall be allowed under subsection (a) for any amount paid or incurred in connection with (A) influencing legislation, (B) participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office, (C) any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referendums, or (D) any direct communication with a covered executive branch official in an attempt to influence the official actions or positions of such official. (2) Exception for local legislation. In the case of any legislation of any local council or similar governing body (A) paragraph (1)(A) shall not apply, and (B) the deduction allowed by subsection (a) shall include all ordinary and necessary expenses (including, but not limited to, traveling expenses described in subsection (a)(2) and the cost of preparing testimony) paid or incurred during the taxable year in carrying on any trade or business (i) in direct connection with appearances before, submission of statements to, or sending communications to the committees, or individual members, of such council or body with respect to legislation or proposed legislation of direct interest to the taxpayer, or (ii) in direct connection with communication of information between the taxpayer and an organization of which the taxpayer is a member with respect to any such legislation or proposed legislation which is of direct interest to the taxpayer and to such organization, and that portion of the dues so paid or incurred with respect to any organization of which the taxpayer is a member which is attributable to the expenses of the activities described in clauses (i) and (ii) carried on by such organization. (3) Application to dues of tax-exempt organizations. No deduction shall be allowed under subsection (a) for the portion of dues or other similar amounts paid by the taxpayer to an organization which is exempt from tax under this subtitle which the organization notifies the taxpayer under section 6033(e)(1)(A)(ii) is allocable to expenditures to which paragraph (1) applies. (4) Influencing legislation. For purposes of this subsection (A) In general. The term \"influencing legislation\" means any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of legislation. (B) Legislation. The term \"legislation\" has the meaning given such term by section 4911(e)(2) . (5) Other special rules. (A) Exception for certain taxpayers. In the case of any taxpayer engaged in the trade or business of conducting activities described in paragraph (1) , paragraph (1) shall not apply to expenditures of the taxpayer in conducting such activities directly on behalf of another person (but shall apply to payments by such other person to the taxpayer for conducting such activities). (B) De minimis exception. (i) In general. Paragraph (1) shall not apply to any in-house expenditures for any taxable year if such expenditures do not exceed $2,000. In determining whether a taxpayer exceeds the $2,000 limit under this clause, there shall not be taken into account overhead costs otherwise allocable to activities described in paragraphs (1)(A) and (D) . (ii) In-house expenditures. For purposes of clause (i) , the term \"in-house expenditures\" means expenditures described in paragraphs (1)(A) and (D) other than (I) payments by the taxpayer to a person engaged in the trade or business of conducting activities described in paragraph (1) for the conduct of such activities on behalf of the taxpayer, or (II) dues or other similar amounts paid or incurred by the taxpayer which are allocable to activities described in paragraph (1) . (C) Expenses incurred in connection with lobbying and political activities. Any amount paid or incurred for research for, or preparation, planning, or coordination of, any activity described in paragraph (1) shall be treated as paid or incurred in connection with such activity. (6) Covered executive branch official. For purposes of this subsection , the term \"covered executive branch official\" means (A) the President, (B) the Vice President, (C) any officer or employee of the White House Office of the Executive Office of the President, and the 2 most senior level officers of each of the other agencies in such Executive Office, and (D) (i) any individual serving in a position in level I of the Executive Schedule under section 5312 of title 5, United States Code , (ii) any other individual designated by the President as having Cabinet level status, and (iii) any immediate deputy of an individual described in clause (i) or (ii) . (7) Special rule for Indian tribal governments. For purposes of this subsection , an Indian tribal government shall be treated in the same manner as a local council or similar governing body. (8) Cross reference. For reporting requirements and alternative taxes related to this subsection , see section 6033(e) . (f) Fines and penalties. No deduction shall be allowed under subsection (a) for any fine or similar penalty paid to a government for the violation of any law. (g) Treble damage payments under the antitrust laws. If in a criminal proceeding a taxpayer is convicted of a violation of the antitrust laws, or his plea of guilty or nolo contendere to an indictment or information charging such a violation is entered or accepted in such a proceeding, no deduction shall be allowed under subsection (a) for two-thirds of any amount paid or incurred (1) on any judgment for damages entered against the taxpayer under section 4 of the Act entitled \"An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes\