Memo #1 Exercise
Upon completing your research, you must communicate your findings in an easily comprehensible manner. Most researchers use an internal research memo that consists of four basic parts: (1) issue, (2) facts, (3) law and analysis, and (4) holding. A sample memo has been provided. The idea is to present the answer to a research question in an objective manner by discussing all relevant authorities. This is not a persuasive writing, you should not pick a side, rather you will present all authorities that support or conflict with your ultimate conclusion.
You will choose relevant FACTS from the scenario given and the tax library to complete this assignment. You can use your textbook for guidance but DO NOT cite your textbook in your memo. It is NOT tax authority. Cite tax authority. You will identify the ISSUE as a single sentence question. You will answer the question in one sentence in the HOLDING section. You will support the answer (from the Holding section) in your LAW AND ANALYSIS section using the IRC (This discussion should be thorough). You will only use the IRC and NO outside sources; your answers should be short but complete (one to two pages).
You will submit your completed Research Exercise including ALL FOUR PARTS (facts, issue, law & analysis, and conclusion) in Word format for each of the three scenarios listed below on by the due date in class by the due date listed in the schedule at the end of the syllabus.
Research Question:
Marcus is a mechanical engineer that graduated from MIT in 2008. He currently works for a mechanical engineering firm for $100,000 per year. Marcus lives in an upscale condominium with a monthly rental amount of $2,900. He has credit card debt of $90,000. His only possession, besides a $5,000 savings account, is a 2011 Mercedes “E” class currently valued at $52,000. Marcus is laid off from his employment and cannot make the $1,900 monthly payment on his Mercedes. The dealership repossesses the vehicle when it was valued at $52,000. Marcus still owes $82,000 on the car. The dealership is not requiring Marcus to cover the difference of $30,000 ($82,000 – $52,000). In other words, Marcus is forgiven that portion of the debt. Marcus asks you if the $30,000 is income to him.
(Hint: Begin your search with §61 but to get the correct answer you must look elsewhere besides §61)
Follow the format of the sample memo provided.
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