ACC/455 – Corporate Taxation
April 15, 2013
Tax Return Position
What position should you take on tax return? Decision-making is loosely defined as the cognitive process or reaching or making a certain choice based on physical, mental, and emotional reasoning. (“Define Decision Making”, 2013.) I have found myself making several decision on tax returns every year, some small, and others large and life altering. People can found themselves seriously weighting out the pons and cons of tax return. In this paper, I will discuss the process on which position to tax on tax return.
The primary sources of tax law have statutory authority, which are the IRS Code, Public laws, and the Income tax treaties. These are the highest authority. Another source is the Treasury Regulation and there are rules and regulations the IRS written in code to be enforced. It could be proposed, final, or temporary. The IRS has other rules and regulation that support the code such as, revenue rulings, private letter rulings, IRS publications, notices and forms. Tax Court Decision is other level of primary source, which is more detailed, taxpayer specific interpretations. The secondary sources of tax law are books, publication, articles, or advice from a professional. They are very important to the development of the law and to understanding the law. Secondary authorities are other authority that the court might use as a basis for its decision. They do not have the same force or effect of the law as the primary authority. It is just used as a starting point for research, when primary authority is unclear and unfavorable. Secondary authority is not persuasive or is never precedent.
Substantial authority is often used as the standard for tax preparation. The tax preparer must support the tax position with sources used to avoid tax penalties. Under I.R.C. 1.6694-2, the tax treatment of an item only if the weight of the authorities...