The facts for this assignment are as follow:

Mary and Bob have been married for 25 years. They are both college professors. Mary (50 years of age) makes $65,000 annually and Bob (60 years of age) makes $75,000 annually. Their oldest daughter is getting married. Bob and Mary would like to either 1) take out a second mortgage on their home (they can get an interest rate of 7 percent) or 2) withdraw funds from their IRAs or 3) sell their rental property. The cost of the wedding is $35,000. The equity in their home is $150,000; they have $80,000 in IRAs between the two of them and the basis of the rental property is $20,000. The rental property can be sold for $120,000. Mary and Bob want to know how they should finance the wedding and if tax implications will be a factor.

Tax research Assignment 3

The five steps in tax research are:

understand the facts

identify issues

locate relevant authorities

analyze the tax authorities

communicate research results.

The two types of tax services that tax professionals use in tax research are annotated tax services, arranged by code section, and topical services, arranged by topic.

Research questions often consist of questions of fact or questions of law.

The answer to a question of fact hinges upon the facts and circumstances of the taxpayer's transaction.

The answer to a question of law hinges upon the interpretation of the law, such as interpreting a particular phrase in a code section.

When the researcher identifies that different authorities have conflicting views, she should evaluate the hierarchy, jurisdiction, and age of the authorities.

Once the tax researcher has identified relevant authorities, she must make sure that the authorities are still valid and up to date.

The most common end product of a research question is a research memo, which has five basic parts: (1) facts, (2) issues, (3) authority list, (4) conclusion, and (5) analysis.