Write a research memo for your permanent record. Identify the issues, provide appropriate support and citations for your reasoning, giving helpful suggestions to your client and logical, succinct writing.

Identify the relevant code sections and finding and referencing at least three (3) court cases. Do not summarize court cases, but feel free to quote parts that are important to your position/argument. Properly cite your sources in the body of the memo (not at the end). Only include primary sources (remember that IRS publications are not a primary source).

Assume all events are in 2020.

Background ReadingDay Trading:

On April 20th, 2020 the price of oil dropped to negative $37 per barrel. An article from medium.com (A Day Trader Loses $9 Million From $2,400 Investment, https://medium.com/datadriveninvestor/a-day-trader-looses-9-million-from-2-400-investment-78c0359b5552, accessed 9/30/2020) details a day trader who tried to make money from this sudden plunge in oil price. While the day trader imagined they would make a considerable amount of money, he actually lost a considerable amount and was subject to a margin call of $9 million. Fortunately for the day trader, his broker cancelled the deal due to a technical issue.

Research case facts and assignment:

Tired of working a 9-5 job, Norman O. Mowney (N.O. Mowney) decided that he wanted to get into investing. Wanting to eat more than Roman Noodles, Norman hopes that he can use investing to replace his regular income. His roommate tells him about an app that will permit him to enter the day trading game.

Norman invests $50,000. Due to some bad investments, Norman sells his stock for a $40,000 loss. Additionally, he spent the following in relation to his day trading:

Commissions: $2,000

Professional investment advice: $1,500

Internet Access: $50/month

Norman also has a house that he bought 5 years ago for 150,000. Worried about how he will cover his day trading losses, he decides to rent out his house. Norman moves out and finds a renter who moves into the house on July 1. The renter pays $1,200 per month, which she pays on the first of every month. However, the renter also prepaid three months of rent on December 30^th, 2020 (which would cover rent for January, February, and March of 2021). The house is worth $175,000 when converted to a rental. Other expenses incurred in relation to the house (unless otherwise noted, expenses cover the entire yearboth before and after the house is converted to a rental):

Repairs (before renters moved in, but required to get house ready to rent): $10,000

Repairs (after renters moved in): $1,600

Liability Insurance: $1,000/year

Property Taxes: $2,000/year

Management fees (after renters moved in): $120/month

Norman does not recall his tax class very well (he remembers Dr. Tree droning on endlessly about blah, blah, blah.it was all rather boring and Norman used the class to catch up on his sleep). As such, Norman hires you as his CPA and asks you to look at the situation and advise him of what he needs to do.

During the conversation, Norman estimates that he drove 500 miles using his personal vehicle on various issues related to his rental. Norman wants to maximize his deductions, and specifically asks about the prepaid rent he received. He seems to recall that businesses dont need to include payments received in advance because the money isnt earned until the following year. Further, he heard that he can use bonus depreciation to deduct the entire value of his house.

Question: What would a research memo for the information given look like?