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Crafting Engaging and Effective Tax Communications | Reference Materials

The Tax Research Memorandum Guidelines

This guidance focuses on a tax research memorandum (internal memo to the file). This memo is not
typically shared with the client. Instead, it is included in the clients file as a record of the research
performed and the conclusions drawn. One of the key purposes of the memo is to provide a research trail
in case the transaction is later questioned by the tax authority.
Tax research memos can take a variety of forms. There is no one correct way to construct the memo.
Despite the variety of preferences, most memos contain the same basic information. In general, the memo
format should organize the facts, issues, and research conclusions of the client situation in a way that
allows others to easily review the content. A memo can be adapted as needed for each situation.
Here is one example of a memo format:

Format of Tax Research Memorandum

Facts A summary of the relevant facts.

Issue(s) A list of the specific issues that were investigated. There may be multiple issues; however, if they
are unrelated issues they should each be examined in a separate memo.

Conclusion A short statement of the outcome of each issue.

Analysis This section includes a summary of the pertinent sources of primary authority that were
reviewed to arrive at the conclusions or recommendations.

In general, a review of a good memorandum should make it clear to the reader that the
researcher completed a thorough analysis of the primary sources of authority. More
specifically, this section should include an analysis of:

1. The applicable code. Do NOT quote the code directly. Include the citation so the reader
can look up the exact wording if necessary. This section is the authors interpretation of
what this code section means for the clients specific situation.

2. The applicable Regulations Again, no direct quotes, just an interpretation as it relates

to the clients situation.

3. Court cases/revenue rulings, etc. Relevant court cases or rulings should be

summarized and applied to the client situation.

Summary This section should include a more thorough summary of the conclusions/recommendations.
Here is additional information about each section of the memo:
Facts
This section contains a brief summary of the relevant facts of the case. Do not include extraneous
information that has no bearing on the outcome or conclusions reached.
Issues
Include a succinct statement of the issue(s) that the fact pattern raises. Be specific and use appropriate
terminology. Each issue should be separately stated and perhaps numbered. Only include multiple issues
if they are related. Unrelated issues should be in a separate memo. The issue(s) should be stated in the
form of a question.
Conclusion
The purpose of this section is to give the reader a quick answer to each issue that is identified. Therefore,
the conclusion is usually a one-sentence answer to the question(s) that was raised in the issues section.
Typically, the reasoning for the conclusion is not included in this section, simply the conclusion itself.
Analysis
This section includes a summary of the various sources of authority that relate to the identified issues.
Many issues will require you to interpret specific aspects of the Internal Revenue Code (IRC). Because the
IRC is considered to be the most important source of authority for federal income tax issues, the analysis
section usually begins with an examination of this source of authority. The analysis of the IRC should
include a discussion of how the IRC applies to the clients situation. In many situations, the Code will not
provide a specific answer to the clients tax situation, so be careful to avoid over-analyzing the Code.
Likely, the Code section will merely provide a broad framework.
After the analysis of the IRC, you should include your analysis of the Regulations, if applicable and
relevant. If there are related regulations, be sure to apply them directly to the clients situation.
Lastly, the analysis should include a discussion of relevant rulings or court cases that address the
taxpayers situation. Be clear on how this authority relates to the clients situation. Additionally, be clear if
there are any significant differences from the clients facts.
Generally, you should only include a summary of primary sources of authority. References should not be
made to the secondary sources of authority. Be sure to cite completely, correctly, and as specifically as
possible (e.g., subsections or paragraphs) all other sources of authority.
Summary
This section typically is a more thorough version of the Conclusion section at the beginning of the memo.
In this section, you provide a summary of the analysis that includes your rationale or reasoning as well as
the final conclusion.

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