Technical Research Tools and Techniques

32.2 Technical Research Tools and Techniques

Technical research is at the heart of prudent and compliant tax practice. In an ever-evolving legal and regulatory environment, the ability to quickly and accurately locate authoritative guidance can significantly enhance the quality of professional services rendered by CPAs and other tax practitioners. This section explores advanced strategies for conducting technical research, examines the use of citators, and provides guidance on navigating common online subscription platforms. From verifying the validity of a court case to synthesizing multiple IRS pronouncements, developing robust research skills is essential for success on the CPA Examination and in real-world tax engagements.

Importance of Technical Tax Research

Technical research underpins all aspects of tax compliance and planning—from individual returns (discussed in Part V) to sophisticated planning for corporations (Part VI) and flow-through entities (Part VI, Chapters 20 and 21). The Internal Revenue Code (IRC), Treasury Regulations, IRS Rulings, and case law form the backbone of primary authority, while secondary sources like tax services, newsletters, and professional commentary further enrich understanding. Learning to navigate these sources effectively helps professionals:

• Stay updated on the latest legislative changes and judicial interpretations.
• Avoid costly penalties and reduce professional liability.
• Improve efficiency and consistency of tax return preparation.
• Provide clients with confidence in research-backed positions.

Foundational Concepts in Tax Research

Before examining advanced strategies, it is critical to master key foundational concepts in tax research, many of which are introduced in Chapter 2 (Foundational Tax and Legal Concepts) and integrated throughout the Ethics section (Part II).

• Primary vs. Secondary Authority: Primary authority includes statutes (IRC), regulations, IRS publications, revenue rulings, revenue procedures, private letter rulings, and case law. Secondary sources are interpretative or explanatory materials like textbooks, treatises, or articles.
• Hierarchy of Authority: The weight assigned to each source depends on its origin. The IRC and Treasury Regulations rank high, IRS rulings and case law provide interpretive clarity, and private letter rulings apply only to specific taxpayers.
• Legal Citations: Familiarity with citation formats is important for quickly locating sources in either print or electronic databases.

The Research Process: An Overview

Tax research typically follows a systematic approach, ensuring each step is thorough and logically sound. Here is a simplified diagram illustrating the process:

    flowchart LR
	    A["Identify <br/>Research Question"] --> B["Select <br/>Research Platform"]
	    B["Select <br/>Research Platform"] --> C["Search & Evaluate <br/>Authoritative Sources"]
	    C["Search & Evaluate <br/>Authoritative Sources"] --> D["Apply Citators <br/>& Evaluate Validity"]
	    D["Apply Citators <br/>& Evaluate Validity"] --> E["Synthesize & <br/>Document Findings"]

• A[“Identify Research Question”]: Specify the relevant tax or accounting issue.
• B[“Select Research Platform”]: Choose the appropriate tool (online subscription service, official website, or treatises).
• C[“Search & Evaluate Authoritative Sources”]: Locate and assess relevant statutes, regs, rulings, and case law; confirm relevance and currency.
• D[“Apply Citators & Evaluate Validity”]: Verify that cited authorities remain good law; use citators to find up-to-date validation.
• E[“Synthesize & Document Findings”]: Prepare a conclusive memorandum or file note detailing relevant authority, facts, rationale, and final recommendations.

Advanced Research Strategies

While novices may rely on basic keyword searches, advanced practitioners refine their techniques to reduce “noise” (irrelevant results) and uncover nuanced interpretations or newly released guidance.

Use Boolean Operators
• AND, OR, NOT: Combining search terms with logical operators narrows or broadens your search. For instance, “bonus depreciation AND section 179” ensures results contain both terms. “bonus depreciation OR section 179” locates documents containing at least one of the terms.

Leverage Proximity and Wildcards
• Proximity: Some research platforms allow searching for terms within a specified number of words of each other (e.g., “depreciation w/5 property”).
• Wildcards: Symbols like an asterisk () allow for flexible endings or root expansions of words—for instance, “deduct” to capture “deduction,” “deductible,” or “deductions.”

Utilize Filters and Segment Searching
• Filters: Narrow results by source type (e.g., cases, regulations, legislative history), reorganizing large sets of documents.
• Segment Searching: Limit results to the case name, headnote, or summary. This helps refine results to specific types of content within a database.

Tap into Specialized Digests and Practice Areas
• Some platforms offer curated digests, highlighting major areas of content (e.g., corporate tax, partnerships, cross-border). Dive into these curated sections to access specialized resources and editorial analysis quickly.

Monitor for Updates and Use Alert Functions
• Many professional research tools allow automatic notifications on specific topics, statutes, or regulations. By configuring alerts, CPAs can remain proactively updated on new developments that impact a client’s tax position.

Citators and Their Applicability

A citator allows practitioners to track the history and treatment of cases, statutes, or rulings. Citators also help confirm whether a legal precedent or statutory interpretation is still valid or has been reversed, superseded, or otherwise limited.

What Are Citators?

Citators are reference tools that compile the history of judicial decisions and highlight the subsequent rulings or references to that decision. Some commonly used citators include:

• CCH Citator
• RIA (Checkpoint) Citator
• Bloomberg Tax Citator
• LexisNexis Shepard’s (Shepardizing)

How Citators Function

A citator entry typically includes:
• Case History: Information on appeals, remands, or affirmations.
• Subsequent References: How other courts or agencies have treated the same legal question.
• Signals or Indicators: Color-coded signals (red, yellow, green) or flags indicating if the case remains good law, is overruled, or has some cautionary treatment.

Best Practices for Using Citators

• Validate All Cases: Never rely on older or out-of-context legal doctrines. Use citators to ensure the precedent is current.
• Check for Parallel Citations: Some cases may appear in multiple reporters. Always verify that you have checked all relevant parallel citations for up-to-date treatment.
• Incorporate Citator Findings Into Research Memo: Summarize the history and negative or positive treatments.

Online Subscription Platforms: Overview

While the IRS website (IRS.gov) and government publications (e.g., EDGAR for SEC filings) provide free resources, subscription-based platforms offer additional tools, editorial content, and advanced analysis. Below is a comparative look at key platforms:

Thomson Reuters Checkpoint

• Comprehensive Library: Encompasses IRC, Treasury Regulations, IRS Rulings, court cases, and editorial interpretations.
• Advanced Tools: Includes customizable research folders, cross-reference linking, and specialized trackers (e.g., a legislative tracker for tax law changes).

CCH IntelliConnect (Wolters Kluwer)

• Integration with CCH Publications: Provides extensive content such as the U.S. Master Tax Guide, plus timely news and updates.
• Practice Tools: Offers calculators, client letters, and flowcharts to guide tax practitioners through nuanced subjects like depreciation recapture or like-kind exchanges.

Bloomberg Tax

• Strong International Coverage: Ideal for global corporations dealing with multi-jurisdictional tax issues.
• Real-Time Tax News and Insights: Customizable news feeds and expert commentary help practitioners keep pace with shifts in cross-border regulations.

LexisNexis / Shepard’s

• Court-Centric Focus: Extensive case law database extending beyond just tax.
• Shepard’s Citations: One of the oldest citator systems, featuring color-coded indicators for deep validity checks.

Westlaw (Tax-Specific Libraries)

• Key Number System: Organized approach to identifying pertinent legal topics quickly.
• KeyCite: Westlaw’s proprietary citator offering flags and depth-of-treatment summaries.

Practical Application: A Case Study

Consider a hypothetical scenario: A CPA is researching whether a taxpayer can combine a Section 179 deduction with bonus depreciation for newly acquired manufacturing equipment. At first glance, the CPA references the IRC sections, relevant Treasury Regulations, and perhaps a recent IRS revenue ruling. To validate references to an older Tax Court case supporting the taxpayer’s position, the CPA then uses a citator:

1. Use Thomson Reuters Checkpoint to locate the Tax Court case.
2. Apply the Checkpoint Citator to see if subsequent cases have disapproved or limited the holding.
3. Observe a “caution” flag indicating a partial reversal by a Circuit Court due to different facts.
4. Synthesize the difference in facts, ensuring the older precedent remains compelling given the client’s situation.
5. Document the findings in a research memo, referencing the validated authority.

This approach ensures that the practitioner arrives at a robust, defensible conclusion.

Searching Government Websites

Although subscription platforms are invaluable, governmental websites such as IRS.gov, Tax Court (ustaxcourt.gov), and the Government Publishing Office (GPO) provide free access to many primary sources:

• IRS.gov: Hosts the Internal Revenue Bulletin (IRB), forms, instructions, publications, and plain-language guidance (for example, Publication 946 for Depreciation).
• USTaxCourt.gov: Tax Court opinions, rules, and forms.
• GovInfo.gov (GPO): Official versions of the IRC, Code of Federal Regulations (CFR), and other federal documents.

While these sites are cost-effective, they often lack advanced search features, editorial content, and citators. Combining free platforms with subscription services can yield comprehensive and verified results.

Integrating Research, Analysis, and Documentation

Once sources are identified, the next step involves critical analysis and written communication. Chapter 31 (Complex Problem Dissections) emphasizes the importance of analyzing multi-faceted tax scenarios. Integrate advanced research findings into a clear, concise memo or opinion letter:

• Fact Pattern Summary: Outline the client’s situation or exam hypothetical.
• Issues Presented: Clearly identify each research question (e.g., “Can the taxpayer claim a Section 179 deduction and bonus depreciation in the same year?”).
• Applicable Authority: Cite all relevant IRC sections, regs, rulings, and cases.
• Analysis: Detail supporting arguments, referencing your citator validations.
• Conclusion: Summarize your final recommendation or position.
• Supporting Exhibits: Attach relevant code excerpts, case summaries, or flowcharts to clarify your reasoning.

Best Practices and Pitfalls

Best Practices

• Roles & Responsibilities: Assign specific research tasks to trained staff and establish a thorough review process.
• Maintain Research Logs: Document search terms, databases, citations, and analysis daily to prevent repetition and confusion.
• Validate Before Relying on “New” Guidance: Use citators to confirm new revenue rulings or memoranda, especially those quickly publicized but not yet tested in courts.
• Organize by Topic: Create tax research folders or subfolders for each topic, labeling them with precise descriptors like “Education Credits,” “Deferred Gains,” or “Depreciation Recapture.”

Common Pitfalls

• Overlooking Negative Treatment: Failing to apply citators or thoroughly read subsequent case decisions can lead to an unsupported or contradictory stance.
• Relying on Secondary Sources Alone: While treatises add value, always confirm the underlying primary authority.
• Blindly Trusting Online Summaries: Summaries are beneficial for quick orientation but cannot substitute for reading the full text of legal documents.
• Neglecting Filing Deadlines and Procedural Nuances: Even well-researched positions require vigilant adherence to deadlines (see Chapter 5: Federal Tax Procedures).

Practical Diagrams and Tables to Aid Research

Accompanying diagrams and tables can significantly enhance comprehension. You might create a reference table summarizing real-world examples of how to combine or concurrently apply Section 179 and bonus depreciation, or a flowchart illustrating the steps involved in verifying partnership basis adjustments under IRC Section 705.

For Additional Exploration

• IRS Publications and Internal Revenue Manual (IRM) – Though not legally binding, these materials clarify IRS auditing positions.
• State Tax Research Tools – CCH Intelliconnect and Thomson Reuters Checkpoint each offer modules focusing on state and local taxes (SALT).
• AICPA Tax Section – Offers additional resources, newsletters, and checklists for members.

In conjunction with Chapter 32.1 (Key Publications) and 32.3 (Technology Applications), these recommendations round out a 360-degree view of advanced tax research.

References and Recommended Reading

• IRS.gov – Primary source for federal tax forms, instructions, and bulletins.
• Thomson Reuters Checkpoint – A leading subscription service offering extensive editorial analysis and real-time updates.
• CCH IntelliConnect (Wolters Kluwer) – Provides comprehensive libraries and strong daily news coverage in tax and accounting.
• Bloomberg Tax – Specialized coverage of international and corporate taxation.
• LexisNexis Academic – Case law and statutory text with integrated Shepard’s citation system.

Whether preparing for complex partnership returns or exploring specialized areas like the Foreign Corrupt Practices Act (Chapter 10.3), advanced research skills ensure CPAs maintain a cutting-edge understanding of evolving legislation and judicial interpretation.

Mastering Technical Tax Research: Expert-Level Practice Quiz

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