Your supervisor asks you to look into some administrative interpretations/updates of asks the Qualified Business Income Deduction. Specifically, your supervisor is interested in the question of whether the QBI deduction may apply to a rental activity and, if so, what procedures, activities, etc. are necessary for landlord to qualify for the deduction. The request is prompted by some work your firm is doing for Robert and Catherin Tate, a retired couple who own and operate two small apartment buildings in the local area area. Summary tax results for the properties, from last years return, are listed below.

	112 Willow Street	422 2nd Avenue
Rents Received	$48,000	$86,400
Rental Expenses	23,900	33,400
Rental Profit or Loss	24,100	52,000

Although the couple does hire outside persons to assist with some of the repair, legal, and accounting issues, the couple actively manage and work on these properties. Estimated hours performed by Robert and Catherine last year are listed below.

	112 Willow Street	422 2nd Avenue
Hours worked by Robert	140	260
Hours worked by Catherine	40	10

Required:

Research the question posed by the supervisor above and, if the taxpayers qualify for the deduction, advise them what steps may be necessary to qualify and continue to qualify for this deduction. Your firm has other taxpayers who are small landlords so your research and advice may be used for multiple clients.

This is a fairly simple assignment (fairly simple facts and requires consulting a very limited number of references). I would say that you could handle this assignment well using no more than a page and a half (single spaced)

II) REQUIRED FORMAT

The memo MUST employ the following format with the prescribed sections identified by the subheadings:

Facts: A brief statement of the pertinent facts (BUT DONT JUST CUT AND PASTE MINE!). This section needs to tell the reader a story and should be written in narrative form. Just listing facts as bullet points seldom tells an adequate story. Remember to include all relevant facts and assumptions.

Issues: Issues are questions. They are not facts or conclusions. The best issues are those stated so that they can be answered simply, often with a yes or no response. The issues should be stated briefly but precisely without too much technicality at this point. Issues should be stated simply to address the bottom line concerns of the interested parties. Leave technical points/words and collateral issues to the Discussion section.

Discussion: The Discussion section is a presentation of the reasoning for the resolution of the issues complete with 1) appropriate organization of paragraphs and employing subheadings where needed or helpful and 2) sound reasoning backed by cited authority.

In this part of the memo, you should address technical points and address collateral issues when necessary. If necessary, you should schedule computations for illustrative purposes.

Assume the memo is intended for a supervisor but may be shared with a client. You have the responsibility for educating the reader, not just resolve the issues. Your discussion should start with an introductory paragraph giving a general explanation/background of controlling principles of the law at issue. Then, move on (in separate paragraphs) to the particular issues, rules, advice, etc. specific to your situation.

Summary: a very brief overall restatement of your conclusions and overall reasoning.