Federal Tax Law ResearchFederal Tax Law ResearchStrategies and TechniquesStrategies and Techniques

Paul D. CallisterPaul D. Callister, JD, MSLIS, JD, MSLISDirector of the Leon E. Bloch Law Library

& Associate Professor of Law

UMKC School of Law

Thinking About Legal Research ProblemsThinking About Legal Research Problems

The ProblemThe ProblemTax Practicum

Professor Wiseman Research Problem

Fall, 2004 Facts: Client received a $3,000,000 judgment in an employment discrimination case. Client’s attorney (“Attorney”) received $1,000,000 out of this amount, and was paid directly by defendant (and therefore, client only received $2,000,000). Client reported income of $2,000,000 on his tax return. IRS assessed a deficiency claiming income was understated by $1,000,000. Client thought this would be moot since he would receive a $1,000,000 deduction for Attorney's fees. The IRS told him that the deduction would do him no good since he would be subject to the alternative minimum tax (AMT). Client lives in Missouri and the case was litigated in Missouri. Questions: 1. Does Client have any arguments to exclude the $1M paid directly to Attorney? 2. How does the AMT come into play? 3. Should a determination from the IRS be appealed? Has the Supreme Court ruled or granted cert on this issue? 4. Is there any pending legislation on the AMT issues? If so, should we be doing any lobbying on this issue? 5. Have any IRS personnel or members of Congress made any speeches or public

comments on these issues? In researching these issues, you should know/learn the following and write down your approach: 1. Find out background information about (a) exclusion from income of litigation awards and (b) deduction for attorney’s fees and (c) AMT.

a. Assume you don’t know the code section—how do you find the relevant statutes and authority?

b. Assume you know the code section (hint: one of sections is §61). How do you find background information and authority on the issue?

c. Identify the sources of background information (editorial comments, treatises, periodicals, IRS information, etc.)

d. Know how to find the documents identified in (c), above. 2. Find the IRC and Treas. Regs. for AMT in:

i. CFR, IRC, CCH, RIA, CCH online, RIA online, two other internet sources 3. Find cases (Tax Court and Fed.) and any IRS documents relevant to these questions. (Describe how to find these documents both online and from print materials.) 4. Are there any law review articles or any other periodical articles on these issues? If so, find the article online and in print material (if it is in our library). 5. Have there been any comments in Tax Notes on this subject? 6. What BNA portfolios discuss these issues? Were they helpful in finding authority and

explanation? How? 7. Is there any discussion of these issues in the NYU Tax Institute in the past four years? If

so, where? 8. How do you find out if there is any pending legislation related to these issues? If there is

pending legislation, what is its status? 9. How do you find out if there are any regulation projects related to these issues? How do

you find out if there are any new regulations within the past year related to these issues?

Need to Know Example Your Answer

Parties Who are we representing (i.e., which side of the issue are we on–buyer or seller, plaintiff or defendant, etc.)? What legal entities are involved (any trusts, corporations, partnerships, etc.)?

Descriptive Words of Facts

Besides the terms "Attorney Fees" and "AMT," what other terms should I be using?

Descriptive Words of Legal Issues

Do you think that the best subject heading to describe the problem would fall under "exculsions from income" or "deductions"?

Specific Sources to be Used

For my research on AMT and "deductions," is there a specific treatise or loose-leaf service I should use?

Applicable Jurisdictions

Do you want me to research federal law within the Eight Circuit? In Missouri?

Time Periods When did the litigation take place? When were the fees to be paid? When are the fees included in income?

When

Working the Problem

Who

What

Where

Solving Tax ProblemsSolving Tax Problems

How do I . . .How do I . . .

1.1. . . . find a sample limited liability company operating agreement in . . . find a sample limited liability company operating agreement in print? On Westlaw?print? On Westlaw?

In print

On Westlaw

2.2. . . . find a sample contract of sale for a restaurant business in . . . find a sample contract of sale for a restaurant business in print? On lexis?print? On lexis?

In print

On Lexis

3.3. . . . determine the minimum filing requirements for a small private . . . determine the minimum filing requirements for a small private placement offering in California?placement offering in California?

In print CCH Blue Sky Law Reporter

On Lexis

On Westlaw

4.4. . . . form a corporation in Nevada?. . . form a corporation in Nevada?

Legal Information Institute--Listing by Jurisdiction  wwwsecure.law.cornell.edu/states/listing.html LexisOne State Resource Locator www.lexisone.com/legalresearch/legalguide/states/states_resources_index.htm

What kind of search?

5.5. . . . find a sample Illinois revocable trust in print? On Lexis? On . . . find a sample Illinois revocable trust in print? On Lexis? On Westlaw? On the Web?Westlaw? On the Web?

On Lexis

On Westlaw

LexisOne Forms http://www.lexisone.com/legalresearch/legalguide/online_forms/forms_center_index.htm Findlaw Forms http://forms.lp.findlaw.com/

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6.6. . . . use looseleaf services like CCH Standard Federal Tax . . . use looseleaf services like CCH Standard Federal Tax Reporter and BNA’s Tax Portfolios? Online?Reporter and BNA’s Tax Portfolios? Online?

On Lexis

On Westlaw

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On CCH

On RIA

7.7. . . . understand the “control group rules” under IRC § 1563?. . . understand the “control group rules” under IRC § 1563?

WordPad Document

On CCH

On RIA

On Lexis

8.8. . . . find out if there are tax consequences if a client sells a . . . find out if there are tax consequences if a client sells a home within a year after moving there (as a result of a home within a year after moving there (as a result of a neighbor abusing his child)?neighbor abusing his child)?

WordPad Document

On CCH

On RIAOn Lexis

9.9. . . . . understand Qualified Domestic Relations . . . . understand Qualified Domestic Relations Orders (QDROs) and how to draft them?Orders (QDROs) and how to draft them?

WordPad Document

On CCH On RIA On Lexis

10.10. . . . research all relevant tax cases similar to the Federal . . . research all relevant tax cases similar to the Federal Second Circuit case, Caplin v. US?Second Circuit case, Caplin v. US?

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On CCH On RIA On Lexis On Westlaw

11.11. . . . find Form 706 (federal estate tax return)? Find the equivalent . . . find Form 706 (federal estate tax return)? Find the equivalent state return in Maine?state return in Maine?

http://www.IRS.gov

12.12. . . . find private letter rulings?. . . find private letter rulings?

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On CCH On RIA On Lexis On Westlaw

13.13. . . . find tax rates and the “Applicable Federal Rate”?. . . find tax rates and the “Applicable Federal Rate”?

http://www.IRS.gov

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The EndThe End