Standard Memo Format This format is somewhat fluid, but in general, these components will be included. As a rule headers appear in bold for readability. 1. Facts/Background The relevant information necessary for understanding the transaction and its accounting. Paint the picture for the non-accountant reader. 2. Question/Issue(s) What issues or questions are you addressing in this memao? 3. Analysis Include excerpts from the guidance along with your own explanation on how it applies. Apply "the Guidance Sandwich" when structuring your commentary. 4. Conclusion Highlight the key points of your analysis which support your conclusion. 5. Financial Statement and Disclosure Impacts When possible, share how this transaction will be recorded and the effect on the financial statements. In practice, any references made to the Codification should be complete initially, but subsequent references may be abbreviated. Information should be directly quoted, not paraphrased, and any omitted information should be carefully considered. In all references go down to the paragraph level of detail. MEMORANDUM Tax Files Jane Doe September 9, 2014 Taxability of Gambling Gains/Losses and Business Expenses Summary of Facts Mr. Colbert earns wages of 100,000 annually. Mr. Colbert is also a professional slot machine gambler, whose gambling activities rise to the level of a trade or business... Issue What is the tax treatment of Mr. Colbert's gambling business gains, losses and expenses? Law and Analysis IRC 162(a) generally allows a deduction for ..all the ordinary and necessary expenses paid or incurred during the tax year in carrying on any trade or business. However, IRC 165(d) applies to gambling... Conclusion Based on 165(d) of the IRC, gambling losses are limited in deductibility to gambling winnings. Furthermore... Financial Statement and Disclosure Impacts Mr. Colbert may only deduct $102,000 of his $116,000 of gambling losses