tax research memorandum

Prepare tax research memorandum for the case below. You should conduct some preliminary tax research (suggest you use topical indices such as the Master Tax Guide and/or the Research Consultant) to identify the “tax issues” you believe relevant to your case.
“http://intelliconnect.cch.com.ezproxy1.lib.asu.edu/scion/secure/ctx_4239656/index.jsp?wksso=false&cpid=WKUS-Legal-IC#page[1]” Should take you straight to the ACC 430 Library Course Page with a CCH Tax Research IntelleConnect quick link. You can then login without the need to go hunting through the library pages. Courtesy your Business Librarians.
Account ID: ahnguye6 Pass: Ashleynguyen92
CASE: “Harold and Maude are residents of Moline, Illinois. They were married in 2010 and filed joint tax returns each and every year since their marriage including their 2014 tax return. Harold is a supervisor at a local auto supply store and is paid about $30,000 per year. Maude works as a receptionist/office manager at a local dental office. She earns a little over $22,000 per year. Unbeknownst to Maude, for the past three years, Harold has been stealing auto parts from his employer and selling them at swap meets or over the Internet. For the three years in question, Harold made $150,000 from his illegal activities. Harold opened a separate bank account to hold the proceeds from his parts sales and kept the account a secret from Maude. However, each month, Harold would transfer $500 from the separate account to the family joint checking account he maintained with Maude. Maude used the joint account to pay the household expenses, such as rent, utilities and groceries. She would review the monthly bank statement and would balance the joint checkbook. Harold used the majority of the funds kept in the separate account to support a drug habit that he successfully hid from Maude and his coworkers. In early 2014, Harold’s employer discovered his thefts and Harold was arrested. On advice of his lawyer, Harold pled guilty and is now serving a three to five year sentence in the state prison. Maude just learned the IRS has issued a joint notice of deficiency against the couple for the $150,000 of illegal income that was not reported on the last three joint income tax returns (2012-2014). Maude is in a state of panic – her convict husband is doing time and has left her to face the wrath of the IRS alone. She turns to you for help”

TAX RESEARCH MEMORANDUM
Rex “Tumbleweed” Banyon was a big western movie star back in the 1950s and
1960s. Now in his late 80s and not in the best of health, Rex has not been a
working actor for many years. Rex has also fallen into some financial difficulties.
He and his third wife live in a beautiful ranch home near Santa Barbara, California
that he purchased about ten years ago when he was in better financial and
physical condition. Rex is presently several months behind in his mortgage
payments (he owes about $3.6 million on the outstanding loan) and the bank has
started foreclosure proceedings. A sympathetic loan officer alerted the media to old
Tumbleweed’s plight and several stories about Rex’s problems have run in the
national press and on television. One person moved by the story is Dot Matrix, a
very successful and wealthy software designer. Dot fondly remembers going to
Saturday Matinees as a child and watching Tumbleweed put an end to the evil
doings of assorted varmints and bad-apples. She decides to help Rex out in his
time of need by purchasing his ranch home from the lender (appraised value of
$3.4 million – the bank agrees to “write off” the $200,000 excess of debt over value)
and lease the home to Rex and his wife for $1.00 per month. Dot figures the Santa
Barbara property is a good long-term investment – and the value of the media
coverage of her act of kindness to old Tumbleweed (Dot is certain she and her
software company will get plenty of favorable publicity) ain’t too shabby either. On
August 1, Rex and his wife execute a Deed in lieu of Foreclosure, conveying the
ACC 430 – Tax Research Cases
Spring 2016
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house to the lender in exchange for being released from the debt. Simultaneously,
Dot purchases the home from the lender for its appraised value and a grateful Rex
and his wife execute a renewable five-year lease on the home at $1.00 per month.
A comparable rental in Rex’s neighborhood is presently running about $6,000 per
month.