The Morris Corporation is a very successful and profitable manufacturing corporation. The corporation just completed leasehold improvements of its corporate offices, primarily for its top executives. The president and founder of the corporation, Mr. Timothy Couch, is an avid collector of artwork and has instructed that the lobby and selected offices be decorated with rare collections of art. These expensive works of art were purchased by the corporation in accordance with Couch's directives. Couch justified the purchase of these works of art on the premise that:

1. They are excellent investments and should increase in value in the future.
2. They provide an appropriate and impressive atmosphere when current and prospective customers visit the corporation's offices.
3. The artwork is depreciable property and the corporation will be able to take sizable write-offs against income.

The financial vice-president of the corporation has requested your advice as to the depreciability of the leasehold improvements and the art. Prepare a research memorandum for the financial vice-president on these issues. Include a discussion on the different depreciation methods permitted and the availability of those methods of depreciation for both the leasehold improvements and the art.

Using your corporation's information and what you have learned in this course, develop a memo to your client using the outline presented. The memo should be 500-750 words and must include the following information:

1. Explanation of the taxpayer's business and issue at hand (heading: Facts).
2. Conclusion as to the recommendations to the company (heading: Conclusion).
3. Explanation of the IRS rules regarding the matter (heading: Analysis).
4. Tax laws and applicable court cases to support the deductions, where applicable (included under the heading: Analysis).