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Tax Return Position Paper

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Tax Return Position Paper

Tax is a complex and technical area of law with frequent changes. When researching the Federal Income Tax laws there are a variety of sources and several approaches that can be used. There are two classifications of information that can be obtained to research and answer tax questions: primary and secondary sources (Thomas Rueters, 2011).

Primary sources of tax law are those issued by Congress, Internal Revenue Service (IRS) or the Treasury Department. Sources from these entities have greater precedential weight than secondary sources. Each of the primary sources has a relative weight to other primary sources. In other words, one or some of the primary sources have precedence over the others. Some of these sources include Internal Revenue Code (IRC), treasury regulations, administrative decisions, legislative decisions and case law from tax courts.

Secondary sources are unofficial sources of tax information. These sources are documented interpretations of tax law by primary sources. They are written by tax experts and or professional writers. Secondary have less precedence than primary sources. However, secondary sources are helpful in finding, analyzing and evaluating primary sources. Some of the secondary sources include journals, periodicals, text books, treaties and newsletters. Secondary sources of tax law should be the place to begin the research because it will provide the primary source from which the information was interpreted.

Substantial authority is an objective standard is an objective standard involving an analysis of the law and application of the law and relevant facts (Alvin A. Brown & Associates, 2008). Substantial authority is not as tough as the more than likely standard. Substantial authority for tax treatment exists "only if the weight of authorities supporting the treatment is substantial in relation to weight of authorities supporting contrary treatment" (Alvin A. Brown & Associates, 2008). The weight of the authorities is determined by reviewing the relevant fact and circumstances. The tax payer has the burden of proving they have substantial authority. The taxpayer's belief that there is sufficient fact that substantial authority exists is irrelevant in determining if substantial authority exists for that treatment. If there is substantial authority for the tax treatment of an item, it is treated as if the tax return was submitted correctly with the computation of tax for that taxable year. Relevant authorities for substantial authority analysis are Internal Revenue Code, other statutory provisions, regulations, revenue rulings and court decisions but not options given by tax professionals (Tax Almanac, June).

The courts and the Internal Revenue Service play an intricate part in interpreting and applying sources of tax law. The Internal Revenue Code (IRC) is the foundation of all

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