Tax Research Memorandum To: File From: Your Name Date: Enter Date Re: Client name and Tax Year. Facts Paraphrase the relevant facts. Remember that this is going to the client’s file and be reviewed and used by someone unfamiliar with the case. Issue & Conclusion #1 Issue: State the most important issue in the form of a question? Conclusion: Answer to the question above in one to two sentences. Analysis 1 Explain here how you came to the conclusion above, relate back to the case and be sure to cite primary authority. Explain how that primary authority relates to the facts of this case. For example if you find a court case where the court findings are helpful to your argument explain how the facts in that case are similar to the facts of the client. This should be at least a paragraph or two in length for each source. At least one primary source per issue, all citations included in the memo can be either footnoted or inline. Inline citation example: “Pursuant to IRC §123 income earned by a taxpayer which is not related to blah blah blah would be taxable.” Repeat the same process for each issue. Issue & Conclusion #2 Issue: Conclusion: Analysis 2 Issue & Conclusion #3 Issue: Conclusion: Analysis 3 Issue & Conclusion #4 Issue: Conclusion: Analysis 4 Issue & Conclusion #5 Issue: Conclusion: Analysis 5 Hawaiian Memories, Inc. Tax Research MemorandumDue Date: Wednesday, November 30 at 11:59 pm Purpose: The purpose of this is to enable you to meet the following goals: · Understand the role of a tax practitioner · Identify the tax issues involved in a scenario · Be able to conduct comprehensive tax research utilizing on-line tools to formulate a solution to the issues raised. · Be able to articulate and defend a tax position in writing. Task: In order to successfully complete this assignment, you must: · Prepare a memorandum to the tax manager outlining the information you found in your research. · Follow the examples of file memoranda using the formatted Word document included. Format the memo to include: · Restatement of Facts (paraphrase) · Identify at least three main issues based on these facts · Provide a conclusion for each issue · Include the analysis that led you to the conclusion for each issue. This analysis should refer to the primary authority that best addresses the issue. · Primary authority would include items such as the Internal Revenue Code, Regulations, Court Cases, etc. These also should be paraphrased to highlight your understanding of the primary authority and how it relates specifically to the issue. IRS Publications and Tax Topics are NOT considered primary authority for this assignment. · Submit the assignment using a Turnitin assignment drop box. · Turnitin, is an online resource that checks your work against the submissions of others, books, articles, tax code, etc., to verify.

1. Tax Research Memorandum
To: File
From: Your Name
Date: Enter Date
Re:
Client name and Tax Year.
Facts
Paraphrase the relevant facts. Remember that this is going to
the client’s file and be reviewed and used by someone
unfamiliar with the case.
Issue & Conclusion #1
Issue: State the most important issue in the form of a question?
Conclusion: Answer to the question above in one to two
sentences.
Analysis 1
Explain here how you came to the conclusion above, relate back
to the case and be sure to cite primary authority. Explain how
that primary authority relates to the facts of this case. For
example if you find a court case where the court findings are
helpful to your argument explain how the facts in that case are
similar to the facts of the client. This should be at least a
paragraph or two in length for each source. At least one
primary source per issue, all citations included in the memo can
be either footnoted or inline. Inline citation example:
“Pursuant to IRC
§123 income earned by a taxpayer which is not related

2. to blah blah blah would be taxable.” Repeat the same process
for each issue.
Issue & Conclusion #2
Issue:
Conclusion:
Analysis 2
Issue & Conclusion #3
Issue:
Conclusion:
Analysis 3
Issue & Conclusion #4
Issue:
Conclusion:
Analysis 4
Issue & Conclusion #5
Issue:
Conclusion:
Analysis 5
Hawaiian Memories, Inc. Tax Research MemorandumDue Date:
Wednesday, November 30 at 11:59 pm
Purpose: The purpose of this is to enable you to meet the
following goals:
· Understand the role of a tax practitioner
· Identify the tax issues involved in a scenario
· Be able to conduct comprehensive tax research utilizing on-

3. line tools to formulate a solution to the issues raised.
· Be able to articulate and defend a tax position in writing.
Task: In order to successfully complete this assignment, you
must:
· Prepare a memorandum to the tax manager outlining the
information you found in your research.
· Follow the examples of file memoranda using the formatted
Word document included. Format the memo to include:
· Restatement of Facts (paraphrase)
· Identify at least three main issues based on these facts
· Provide a conclusion for each issue
· Include the analysis that led you to the conclusion for each
issue. This analysis should refer to the primary authority that
best addresses the issue.
· Primary authority would include items such as the Internal
Revenue Code, Regulations, Court Cases, etc. These also
should be paraphrased to highlight your understanding of the
primary authority and how it relates specifically to the issue.
IRS Publications and Tax Topics are NOT considered primary
authority for this assignment.
· Submit the assignment using a Turnitin assignment drop box.
· Turnitin, is an online resource that checks your work against
the submissions of others, books, articles, tax code, etc., to
verify originality of your content. Given that everyone in the
course is working on the same problem and using the same
format, the service will likely find some similarity in your
paper. Upon submission you will be able to see your score
immediately, as others submit their papers your score may
increase. Should you resubmit your paper, the originality score
will not be viewable for 12-24 hours.
· I use the information supplied by Turnitin as well as my

4. professional judgment to determine the originality of your
paper. A high similarity rating is an indication of either
plagiarism or insufficient original content, any submission with
20%+ similarity score will receive additional scrutiny.
Plagiarism is a serious issue which would be a violation of the
student code of conduct and would be reported to Student
Affairs.
· I will accept late assignments for no more than 48 hours after
the due date, with a 20% penalty.
The writing assignment will be graded based on grammar, style
of writing, logical development of ideas, critical thinking skills,
and technical accuracy of the analysis and conclusions, using a
rubric, which is found below.
Rubric to be used for grading
Expert
Average
Novice
Content
35 points
35
Contains ALL the following:
-All issues identified and thoroughly analyzed.
Thorough analysis of each issue
32
Contains ANY of the following:
Identified most of the relevant issues.
-Good Analysis most issues addressed
28-0
Contains ANY of the following:
-Several relevant issues not addressed

5. -Insufficient analysis
Complete-ness
20 points
20
Contains ALL the following:
-Proper primary authority citation for all issues.
At least one includes primary authority other than code
sections.
-Conclusion and/or recommendation offered
17
Contains ANY of the following:
-Most issues contain primary authority of Code Sections.
- Conclusions and/or recommendations not offered for all issue
15-0
Contains ANY of the following:
-Primary authority not cited
-No conclusions and/or recommendations offered
Readability
20
points
20
Contains ALL the following:
-Well written easy to follow clearly discusses issues.
-Followed recommended format.
17
Contains ANY of the following:
-Some areas include awkward wording or phrasing.
-Grammatical errors.
-Did not follow recommended format.
15-0
Contains ANY of the following:
-Difficult to read

6. -Numerous grammatical errors
Hawaiian Memories, Inc. (HMI) is a C corporation that was
formed in 2007 in Maui. The company markets specialty
tourism products of the islands of Hawaii. The initial
incorporators were Angie Lee and Bob Lin, who now own 1,000
shares of voting common stock and 100 shares of preferred
stock each. The company has eight employees who collectively
own 500 shares of nonvoting stock. Most of the employees
have worked for the company for several years and purchased
the stock when offered at the end of each year. Two own 100
shares each; the other six own 50 shares each.
All individual shareholders are native Hawaiians except for
Inge; she is Swedish and has lived on Maui and worked for HMI
for three years. Inge plans to move back to Sweden in one year
and try to develop markets for HMI products there. Another
stockholder is the Plantation Sugar Partnership (PSP). PSP
owns 500 nonvoting common shares; it supplies raw sugar in
bulk to HMI. Bob Lin and his sister Katie each own 50% of
PSP.
The corporation uses a September 30 year-end. The year was
chosen arbitrarily. All the HMI shareholders use calendar
years. Financial statements for the year ended September 30,
2022, are attached. HMI does not expect that it will generate
any significant increases in investment or passive activity
income in the coming years.
This was the first year of corporate operating losses in some
time. The corporation elected not to carry back the losses
because the tax rate paid in those years was lower than they
expect to pay in the future. Bob and Angie expect one or two
more years of losses and then steady increases in net income.

7. Bob lives in Hawaii and manages operations there. Angie
moved to San Francisco in 2012 to develop mainland markets
for their products. Both earn annual salaries of $150,000. The
shareholders and all employees are provided accident and health
insurance. The company contributes 10% of each employee's
salary to a defined contribution pension plan each year.
On October 5, 2022, Bob and Angie came to your office for the
first time. They had just filed the corporate return for the fiscal
year ended September 30, 2022 and are interested in having you
take over all the future tax work for the corporation. They
inform you that they have just read an article in
Tourism Retailing about the tax and cash-flow benefits
of pass-through losses. They have filed an election to be an S
corporation, effective on October 1, 2022.
Bob and Angie signed the consent for the S election because
they were the only shareholders with voting stock. Their
reasoning for making the S election is that they expect losses
for a year or two as they try to expand, and they would like to
use the losses already incurred as well as prospective losses
against their other income. Review all relevant information and
identify any issues related to conversion to S status.
Prepare a tax memorandum to your tax manager, Maria
Gonzalez that discusses all relevant issues. This memorandum
will serve as the basis for the advice the firm will be giving Bob
and Angie about the conversion to S status in your upcoming
meeting.
Hawaiian Memories, Inc.

8. Book/Tax Balance Sheet
September 30, 2022
Accounts
Book/Tax Basis
Fair Market Value
Assets
Cash
$100,000
$100,000
Trade accounts receivable
250,000
250,000
Inventory*
450,000
500,000
Furniture & Fixtures
$300,000
Accum. depreciation
(160,000)
140,000
100,000
Investment - Land
350,000
850,000
Total Assets
$1,290,000
$1,800,000
Liabilities and Stockholders’ Equity

9. Accounts Payable
$145,000
Note Payable, Hawaiian National Bank
200,000
Paid-in-Capital, Common
500,000
Paid-in-Capital, Preferred
100,000
Retained earnings
345,000
Total Liabilities and Stockholders’ Equity
$1,290,000
Notes:
The difference between FIFO and LIFO is expected to be
approximately the same for the next year. The entire layer of
inventory on hand at conversion will be sold by September 30,
2023
Memories’ balance in Earnings and Profits is $300,000. Current
E&P for the year ended September 30, 2022 was $0.
Hawaiian Memories, Inc.
Book and Tax Income Statement
for the 12 months ending September 30, 2022
Revenue:

10. Sales
$1,650,000
Interest Income
10,000
Total Gross Income
$1,660,000
Expenses/Deductions
Cost of Goods Sold
$1,094,000
Salaries, Angie & Bob
$300,000
Salaries, other
200,000
500,000
Employment taxes
50,000
Rent expenses
36,000

11. Depreciation
40,000
Employee health care
$85,000
Contribution to employee retirement plans
45,000
130,000
Other operating expenses
55,000
Total Expenses
1,905,000
Net Income/(Loss)
($245,000)
Hawaiian Memories Inc
Plantation Sugar Partnership
500 non-voting common

12. Bob
50%
Katie
50%
Angie
1,000 voting common
100 preferred
Bob
1,000 voting common
100 preferred
Carl, Donna
100 non-voting common each
Ernie, Frank, Gertie, Hannah, Inge, Jerry
50 non-voting common each
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