Tax 8-4 Identify the steps necessary to research a tax problem properly.

Question 1

Tax Research

Describe the approach for researching a tax issue.

8-4

Answer 1

Obtain all of the facts;

diagnose the problem from the facts;

locate the authority;

evaluate the authority;

derive the solution;

communicate the answer.

Question 2

Tax Research

What are the sources of all federal tax law?

8-4

Answer 2

The Internal Revenue Code and Treasury regulations are the primary sources of all tax law.

Question 3

Tax Research

What weight should be given to Treasury decisions?

8-4

Answer 3

They are authorized by law and have the full force and effect of law.

Question 4

Tax Research

What weight should be given to revenue rulings and revenue procedures?

8-4

Answer 4

They do not have the force and effect of Treasury Department regulations, but they may be cited as precedents. A revenue ruling is the administrative interpretation of the statutory tax law that is generally related to specific factual circumstances, whereas a revenue procedure is generally related to compliance matters.

Question 5

Tax Research

What should congressional committee reports be used for?

8-4

Answer 5

The congressional committee reports are used to indicate congressional intent when a law is enacted. They are very useful when regulations or other guidance is lacking.

Question 6

Tax Research

What is the effect of an IRS private letter ruling?

8-4

Answer 6

The private letter ruling (PLR) may not be cited as precedent except by the taxpayer who requested it. However, it may be useful because it indicates the probable approach of the IRS in a particular situation.

Question 7

Tax Research

Module Check

4. Which one of the following statements is correct with regard to the organization of the Internal Revenue Code?
   a. The Code is organized by subtitle, chapter, subchapter, part, section, and subsection.
   b. The Code is organized by chapter, subchapter, title, section, and part.
   c. The Code is organized by title, section, subsection, chapter, and subchapter.
   d. The Code is organized by title, subtitle, chapter, subchapter, and section.

(LO 8-4)

Answer 7

a. The Code is organized by subtitle, chapter, subchapter, part, section, and subsection.

Question 8

Tax Research

Module Check

6. Which one of the following is not a step in the tax research process?
   a. obtaining all the facts
   b. diagnosing the problem from the facts
   c. obtaining a letter ruling from the IRS if the issue is novel
   d. communicating the answer

(LO 8-4)

Answer 8

c. obtaining a letter ruling from the IRS if the issue is novel

Communicating with the IRS is not a typical step in the research process.