You will write this as a client memorandum. The format should be separate sections for $(1)$ facts $(2)$

issue or issues $(3)$ discussion $(4)$ conclusion.

You can borrow my language below for the facts and the issue, or you can phrase it yourself.

The length should be whatever is required to answer the question.

You should use only primary authorities, which are cited within the body of the discussion, either within

a sentence or as a parenthetical reference after the sentence. As an example:

Section $163($a$)$ provides, as a general rule, that all interest paid during the year shall be allowed

as a deduction. Section $163($h$)(1)$ states that no deduction shall be allowed for personal interest.

For this purpose, personal interest does not include any interest paid on qualified residence

debt $($Section $163($h$)(2)($D$)).$ Qualified residence debt include acquisition debt and home equity

debt $($Section $163($h$)(3)).$

Notice that all of the above references are in Section $163.$ However you cannot simply cite $$Section

$163$ for all of those comments. That does not help a reader to understand what provision supports each

statement. It does not allow a manager or partner in your firm to review your work $$ they would have to

do the research themselves to determine whether your statements are actually found in the law. It

would be similar to a police report saying $$Witnesses to the crime indicated that a male in light colored

clothing ran from the crime scene. One witness saw the man drop a knife in the bushes as he ran, and

another witness saw him drive away in a blue van.$$ These statements are not attributed to any specific

witness. Be specific about what part of the law supports each of your statements.

The conclusion should conclude what you have said $$ what is the answer to the issue raised? The

conclusion does NOT introduce new discussion.

The facts are:

Mary and Bill Markson purchased a house in $2011.$ The Marksons rented this property from June $2011$

until August $2014$ at which time they occupied the property as their principal residence. The house was

acquired for $$300,000$ and the Marksons claimed $$30,000$ of cost recovery deductions during the $38$

month rental period. The property was sold in March $2024$ for $$550,000.$ The property was used for a

total of $153$ months, with the last $115$ months of use as the Markson$$s principal residence.

The issue is:

What amount of gain will be recognized by the Marksons from the sale of this property?