Tax Research Memo
Tax Research Memo
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· Sarah is the sole owner of Bluegrass Corporation. The basis and value of her stock investment in Bluegrass are approximately $100,000. In addition, she manages Bluegrass’s operations on a full-time basis and pays herself an annual salary of 40,000. Because of a recent downturn in business, she needs to put an additional 80,000 into her corporation to help meet short-term cash flow needs (e.ge inventory cost, salaries, and administrative expenses). Sarah believes that the 80,000 transfers can be structured in one of three ways: as capital contribution, as a loan made to protect her stock investment, or as loan intended to protect her job. Form a tax perspective, which alternative would be preferable in the event that bluegrass’s economic slide worsens and bankruptcy results? Explain your answer.
Partial list of research aids:
Kenneth W. Graves, 87 TCM 1409, T.C. Memo. 2004-140
· Instructor:
1. Research the problem at any library with tax research facilities, or use online tax research database.
2. The memo should contains of four sections:
a. Issue
a. 1-2 sentences showing the issue
b. Applicable Law:
a. Cite at least ONE applicable Internal Revenue Code section.
b. Other cites should include Regulation, Revenue Rulings, and court cases
c. Analysis
1. In this section compare your fact situation to ALL the authorities cited in the “Applicable Law” section.
2. IMPORTANT, for every authority mentioned in the “Applicable Law” section include a complete discussion of how each cited authority relates to the facts of the research problem.
3. Be specific and thorough in your comparison. Cite every authority by name.
d. Conclusion
1. 1-2 sentences
2. You don’t need to be clear in your opinion about the case but kind review the facts.
1. Applicable Law section and Analysis section should have the same number of authorities.
2. Use the Memo of the whole case in this link.
http://www.ustaxcourt.gov/InOpHistoric/graves.TCM.WPD.pdf
