A taxpayer wants to change his company's headquarters - a ten-story building. The company currently owns the building outright. The taxpayer has identified some potentially more suitable properties. One of the possible properties is a single story building on a large, attractive lot. The other property consists of a two-building complex, with retail shops on the ground floor of one building and residential rental property in a portion of the other building. The taxpayer asks you to help him.
a. What is your role as a researcher in this situation? What are your responsibilities in each of the stages of the research process you are going to undertake?
b. Assume that a colleague provides you with only the preceding facts. He explains that the taxpayer is a very busy person with little patience. The client has arranged to meet with you and expects you to be fully prepared with the questions you want addressed and any additional information he will need to get for you. Prepare for this meeting. Make sure to have your initial list of questions and any additional questions you may want to ask depending on the client's answers.
c. Knowing only the information provided previously, what possible research questions and issues can you spot?
d. Before you attend the meeting with the client, you briefly refresh your memory about the rules related to selling and exchanging business property. The parts of the law you find most pertinent are:
* Demolition expenses of buildings are not deductible.
* The sale of business property will usually trigger a taxable gain or a potentially deductible loss. Relevant factors in determining whether something will trigger a gain or a loss include original purchase price, improvements, depreciation taken, and sales price of the property.
* The exchange of business property instead of the sale and purchase can result in no taxable gain or loss.
Does this additional information affect the questions you plan to ask? If so, how?
Does it affect the tax research issues you initially spotted? Why or why not?
e. Role-play the initial meeting with the client. Have someone in your class play the client, and you play the researcher. How, if at all, did your research question change as a result of the client's responses? Was this simply a mechanical process? How did your critical thinking skills impact your selection of initial questions and responses to the client?