Your client, I. M. Wheeler, is considering exchanging commercial property with R.E. Investments, Inc.

Wheeler owns a warehouse which she has held for investment since 2015 with a fair market value of $675,000, subject to a mortgage of $350,000 and an adjusted basis of $175,000.

R.E. Investments owns a rental property with a fair market value of $540,000, subject to a mortgage of $365,000.

The planned transaction is for Wheeler to exchange his property for R.E. Investments' property plus $150,000 cash. Each party will assume the mortgage on the property received.

Wheeler wants to make sure that the transaction qualifies for IRC Section 1031 like-kind exchange and has asked you to provide a memo detailing the requirements that must be satisfied for like-kind exchange treatment. Your memo should also analyze any gain realized and/or recognized, the taxation, if any, and Wheeler's basis in the new property. Discuss facts relevant to the question presentedthat is, facts that provide necessary background of the transaction (generally, who, what, when, where, and how much) and those facts that may influence the research answer. Keeping the fact discussion relatively brief will focus the reader's attention on the relevant characteristics of the transaction.

Issues:State the specific issues that the memo addresses. This section confirms that you understand the research question, reminds the reader of the question being analyzed, and allows future researchers to determine whether the analysis in the memo is relevant. Issues should be written as specifically as possible and be limited to one or two sentences per issue.

Authorities:In this section, the researcher cites the relevant tax authorities that apply to the issue, such as the IRC, court cases, and revenue rulings. How many authorities should you cite? Enough to provide a clear understanding of the issue and interpretation of the law. Remember, in order to reach an accurate assessment of the strength of your conclusion, you should consider authorities that may support your desired conclusion, as well as those that may go against it.

Conclusion:There should be one conclusion per issue. Each conclusion should answer the question as briefly as possible, and preferably indicate why the answer is what it is.

Analysis:The goal of the analysis is for the researcher to provide the reader a clear understanding of the area of law and specific authorities that apply. Typically, an analysis will be organized to discuss the general area(s) of law first (the code section) and then the specific authorities (court cases, revenue rulings) that apply to the research question. How many authorities should you discuss? As many as necessary to provide the reader an understanding of the issue and relevant authorities. After you discuss the relevant authorities, apply the authorities to your client's transaction and explain how the authorities result in your conclusion.