locate primary sources of tax law using an electronic tax research database

ACC 311

Tax Research Project #1

Spring, 2014

Objectives:  This project provides students with an opportunity to

1.  locate primary sources of tax law using an electronic tax research database;

2.  perform keyword searches;

3.  read, cite, and analyze the two most important primary sources of tax law, the Internal Revenue Code and the Treasury Regulations; 

4.  determine which Internal Revenue Code section and/or Treasury Regulation is relevant to a taxpayer’s specific set of facts and apply it to the taxpayer’s facts; and      

5.  develop a reasonable conclusion to a tax issue using only primary tax law sources.

Due Date:  Monday, March 3rd, by 8:00 p.m.

Required:  (35 points)   

1.   Use the RIA Checkpoint tax service available online at Park Library to find the Internal Revenue Code section and/or Treasury Department regulation that correctly answers the issue addressed in each of the problems below. On a separate sheet of paper, provide the information requested.  Your answer can either be typed or handwritten (providing your handwriting is legible). 

2.   Print a copy of each IRC section and Treasury Regulations you cite and attach the copies at the back of your project.  

3.   For purposes of grading, points will be assigned to finding the correct answer as well as to the written format of your answer.  For each problem, answer the question and explain why you reached the conclusion you did by applying the authority you find to the taxpayer's facts.  In your explanation, quote the exact text of the relevant portion(s) of the authority that answers the question (i.e., put quotation marks around the relevant portion of the authority) and cite the portion(s) of the authority you are quoting.  For example, state: 

None of the scholarship is included in Tom’s gross income.  According to Code Section 117(a), “gross income does not include any amount received as a qualified scholarship.”  Qualified scholarships are defined in Code Section 117(b) as “any amount received …to the extent…such amount was used for qualified tuition and related expenses.”  According to Code Section 117(b)(2)(B), qualified tuition and related expenses include amounts spent on “books,” so Tom’s scholarship is not taxable since he used all of his scholarship proceeds to purchase textbooks. 

 

4.   Cite the authority you quote for each question you answer.  If both the IRC and the Treasury Regulations answer the question, always use the source of tax law that has the highest weight of authority to answer the question.

5.   Other items that will be graded include:  use of correct grammar and spelling, correct citation of authorities, and appropriateness of the conclusion given the tax authorities found.

6.   You may work with one other student on this project, and students may be from any section of the course.  If you work with someone else, turn in only one project for the team, and place the names of the students who worked on the project on the first page of your project.

 

Research Problems:

1.   Private G.I. Jane was a soldier in the Iraq War.  Her salary was $2,600 per month, and she was in the war zone for eight months.  How much of her salary is taxable for the eight months?  Cite your answer.  (Note: a private is considered enlisted personnel below the grade of commissioned officer.)

2.   Roger is an independent long-haul trucker.  He runs his trucking business as a sole proprietor.  While transporting a customer's inventory across country, he received a speeding ticket for $500, which he paid.  Can Roger deduct the cost of the speeding ticket as a business expense?  Cite your answer.

  

3.   Stephanie is the two-year old daughter of Jason and Kelly Larkspur.  Stephanie starred in several television commercials this year, for which Jason and Kelly received $50,000.  In order to be in the commercials, the Larkspurs spent $9,000 on special costumes for Stephanie to wear in the commercials.  They also donated $10,000 in Stephanie's name to the local Animal Humane Society, a qualified charitable organization.

a.   Who reports the $50,000 in gross income?  Jason and Kelly or Stephanie?  Cite your answer.

b.   Who reports a business expense deduction for the $9,000 paid for the costumes?  Jason and Kelly or Stephanie?  Cite your answer.

c.   Who reports a charitable contribution deduction for the donation made to the Animal Humane Society?  Jason and Kelly or Stephanie?  Cite your answer.

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