TAX Memo A

Instructions:

The memo should be two pages and students should use the tax memo template provided.

Tax Memorandum A:
Relevant Facts:
Marcuse Aurelius is the CEO of Latifundium Corporation (LC), a Chapter C Corporation. LC
manufactures agricultural fertilizers for agribusiness consortiums. The primary raw material used
in the fertilizer production is rock phosphate which is extracted from a mine owned by LC a few
miles from the fertilizer processing plant. In 2018, Aurelius purchased, modified, and installed
two new industrial furnaces in the processing plant. The new equipment was placed in service on
April 1, 2018 and was subject to depreciation under IRC Section 167(a)(1). In August 2023,
Conagra offered to purchase one of the furnaces from LC. Aurelius has come to you for advice
regarding the tax implications of a sale by LC of the furnace.
Questions:
1. Under the terms of Section 1221 what is the tax treatment of the gain or loss from the sale of
depreciable trade or business property, or real property used in a C Corporation’s trade or
business? Explain.
2. For tax planning purposes, could Section 1231 change the result? Explain.
Tax Research Memo
Sample Format
Your Firm
Your Town and State
Date
Relevant Facts
This section should summarize the important facts of the research case. Only
include the relevant facts in a clear and concise manner.
Specific Issues
Identify the issue(s) and state the issue(s) in the form of a question.
Conclusions
Think of your conclusion as the “short” answer to your issue. The conclusion
section is the place to provide tax advice, recommend action(s) for the client to take,
or identify the need for additional information. There may not be a single “best”
alternative to the client’s issue so be sure to consider all applicable alternatives.
Support your conclusion by referencing back to the authority you discussed in the
discussion and analysis section.
Support
This section discusses the issue(s). Begin with the relevant code section(s).
Identify the code section, paraphrase what it says and then discus why it’s
important. Discussion of the relevant Treasury Regulations should follow. Identify the
regulation, paraphrase the important sections, and then address the importance of
the regulation given the facts.
The discussion
should continue by
reviewing relevant Treasury
pronouncements (Revenue Rulings, Revenue Procedures, Letter Rulings, etc.) and
cases. Be sure to include complete cite for each authority. Summarize the important
facts for the pronouncement/case and then compare the facts of the
pronouncement/case to the research facts. Discuss how the facts are similar or
different. Explain how each ruling or case supports or weakens the clients’ position.
Documentation is a very important part communicating tax research and all
statements or opinions should be substantiated with supporting cites. Supporting
cites should be to primary sources only except in rare or unusual situations.