Early this year, a taxpayer was clearing dry brush from behind his Malibu home in California. He
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The taxpayer wishes to take a casualty loss deduction for the loss of his house, which was worth an estimated $1,000,000 at the time of the fire. The taxpayer purchased the home for $900,000 only six months earlier. Insurance has refused to compensate for the loss under the circumstances. The taxpayer is currently out on bail. He is the brother of one of your very significant clients who has asked you to provide tax advice to the taxpayer.
a. Are there any additional questions you should ask the client before you begin your research?
b. What additional potential sources of information might you want to ask for?
c. Which of the preceding facts are relevant? Which are irrelevant?
d. Is there a chance that you will need to ask more questions at a later point? Why or why not?
e. What is the first question you will try to answer in your research? Are there any additional issues that you can identify at this time?
f. What is the taxpayer's desired result? Why is this important? How does it affect your role as tax advisor?
g. Is this a planning research type of situation? How do you know?
h. Do you have an initial belief regarding the tax treatment in this circumstance?
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