THE REVISION PROCESS

1. THE REVISION PROCESS Revising, Editing and Proofreading for Accounting Michelle Doss, 2006

2. THE WRITING PROCESS Prewriting Writing Revision

3. WRITING THE TAX MEMO The tax memo contains the following: • Client • Relevant facts • Specific issues • Conclusions • Support • Actions to be taken • Preparer

4. REVISING, EDITING, AND PROOFREADING • Revising • Occurs at the level of ideas • Focuses on questions of purpose, audience and voice • May mean deleting entire sections and starting over • Editing • Occurs at the level of language • Sharpens your word choice and organization to make it as precise and effective as possible • Follows revision for most effective use of time • May focus on grammar, usage, and mechanics • Proofreading • Checks for accuracy and correctness • Follows all other revision for most effective use of time • Focuses on grammar, usage, and mechanics

5. QUESTIONS OF PURPOSE • Why am I writing this? • To convey the results of the research to a superior • Do all parts of the paper meet/advance this purpose? • Have I stated the purpose clearly?

6. QUESTIONS OF AUDIENCE • Have I provided the full context and background for audience? • Usually fellow tax practitioners are well-versed in federal tax law, understanding frequent and complete references to primary and secondary sources of the tax law, and needing no introduction to the hierarchy of tax authority or to statutory citation practices • Have I answered all questions and/or objections my audience might have? • Will my tone and style most effectively communicate my ideas to my audience so that I get the response intended?

7. 10 REVISING STRATEGIES • Let it sit. • Reread as if for the first time. • Test your claim. • Evaluate your evidence. • Evaluate your paragraphs. • Dialogue with your paper. • Eliminate extraneous material • Add new details. • Switch perspective. • Be willing to let it go and start over.

8. EDITING SENTENCES • Are the issues, conclusions and supporting analysis stated clearly and unambiguously? • Is each sentence in the correct form (statement, question, etc.)? • Does each statement provide the appropriate amount of detail? • Are the issues numbered and arranged in the most logical order? • Does each word, phrase, clause make sense and have purpose? • Do the punctuation marks guide the reader in understanding how to read the sentence?

9. STATING YOUR ISSUES: An Example Not a question and vague: A question arises as to how much the taxpayer can deduct for the payment he made for the expense. Question and specific: Can part or allof the$13,000 payment be deductedand, if so,what is the character of the deduction?

10. STATING ISSUES: An Example Unclear tax concept What is the tax treatment for a company under Reg. §1.162-5(c)(1)when it pays its employee’s tuition? Explicit tax concept Can Borden Company deduct the $2,300 it pays to Smith to cover his tuition?

11. STATING ISSUES: An Example Emphasize tax concepts rather than financial accounting concepts: Accounting concept Can Bikes-R-Us, Inc. expensethe rental payment to its chief financial officer? Tax concept Can Bikes-R-Us, Inc. deductthe rental payment to its chief financial officer?

12. STATING YOURSUPPORTING ANALYSIS: An Example Insufficient Detail: The theft loss is deductible in 2006 according to IRC §165(e). Better: IRC §165(e) indicates that theft losses are deductible in the taxable year sustained. Thus, the theft loss is deductible in 2006.

13. EDITING FOR WORDINESS Wordiness: • Using more words than necessary when making one’s point; needlessly distracts the reader from the main points. • Eliminating wordiness results in a concise writing style that is easier to read and provides fewer opportunities for misinterpretation.

14. Wordy Code Section 61 In Smith v. U.S., the court held Take a deduction for Tax deductible The Smith v. U.S. decision United States Better §61 (Sec. 61) In Smith, the courtheld Deduct Deductible The Smith decision U.S. TAX-RELATED WORDINESS

15. REVISION SKILLS Original: Expenses incurred by a taxpayer during a given year in regard to the conduct of a trade or business can be deducted from net income according to Internal Revenue Code Section 162 and Treasury Regulation Section 1.162. • Improved: • IRC §162 and Reg. §1.162-1 allow deductions for ordinary and necessary expenses paid or incurred in the year in connection with the conduct of a trade or business.

16. ACTIVE AND PASSIVE VOICE Active Voice:the subject does the action of the verb The committee is looking into the matter. Passive:the subject does not do the action of the verb. The matter is being looked into by the committee.

17. Active Most messages in business and technical writing Passive The doer is unknown, unimportant, clear from the context, or appropriate to hide. When to use Active vs. Passive

18. CONVEYING BAD NEWS Active:I think your farming activity is a hobby and, thus, disallow your deduction. Less Confrontational: • Passive: Since your farming activity is a hobby, no deductible loss is allowed. • Active:The IRS considers your farming activity to be a hobby and, thus, disallows your deduction.

19. REVISION SKILLS Original: In addition to the above mentioned Code Section in the event that education expenses maintain or improve skills required of the taxpayer in hisemployment or education expenses are required in order to retain his position or rate of compensation an expense is allowed by Regulation §1.162-5. Improved: Additionally, Reg. §1.162-5(a) allows a deduction if education expenses either (1) maintain or improve skills required of the taxpayer in his/her employment or (2) are required in order to retain his/her position or rate of compensation.

20. EDITING FOR PARALLEL STRUCTURES Parallel structures: two or more phrases or sentences that have the same grammatical structure and use the same parts of speech • Make your sentences clearer and easier to read • Help your reader see the connections between ideas in a series of consecutive sentences

21. EDITING FOR PARALLELISM Without parallelism: • Prepare letter to review with client • The client should obtain multiple appraisals of building. • Appraisal should be attached to client’s tax return. With parallelism: • Prepare letter to review with client. • Suggest client obtain multiple appraisals of building. • Attach appraisal to client’s tax return.

22. EDITING PUNCTUATION Commas • Act as Yield signs for the reader • Allow the reader to pause, digest the information, and continue with the same main idea

23. COMMON USAGE FOR COMMAS • Before coordinating conjunctions (independent clauses and items in a series) • The client is entitled to deduct the appraisal of the building, and the deduction should be treated as an itemized deduction. NOTE: You must have a coordinating conjunction with a comma to separate two independent clauses.

24. COMMON USAGE FOR COMMAS • To set off introductory elements • After the fire department finishes using the building, Ross plans to demolish the building and leave the lot vacant.

25. COMMON USAGE FOR COMMAS • To set off nonrestrictive modifiers or appositives • The new ruling, which weakened our conclusion considerably, is not the only applicable. (nonrestrictive) • The new ruling that weakens our conclusion considerably should be applied. (restrictive) NOTE: Be careful that you do not separate your subject and verb with a comma! Incorrect: The hurricane heading our way, caused some to panic. Correct: The hurricane heading our way caused some to panic.

26. COMMON USAGE FOR COMMAS • Also use commas • To set off parenthetical expressions and elements of contrast • To set off interjections, tag sentences, and direct address • Between quotations and attributory phrases • With numbers, dates, names and addresses • Whenever necessary to prevent misreading TIP:Use the search function to find all your commas. Evaluate your use, and edit where necessary.

27. EDITING PUNCTUATION Semi-colons • Act as Stop Signs • Allow the reader to stop, digest the information, and move to a closely-related idea

28. COMMON USAGE FOR SEMI-COLONS • To separate two independent clauses • The hurricane, heading our way, caused many to evacuate; the mass evacuation created gridlock on the highways. • To separate items in a series containing commas • The forecasted intensity of the hurricane, which came so soon after Katrina; the recent images of damaged or destroyed property, lists of missing people, and shelters full of people; and the warnings coming from officials prompted many people to leave as soon as possible.

29. INCORRECT USAGE OF COLONS • Do not use a colon after an introductory phrase or independent clause • Incorrect: As I learned this weekend: sometimes anticipation is worse than the storm. • Correct: As I learned this weekend, sometimes anticipation is worse than the storm.

30. INCORRECT USAGE OF COLONS • Do not use a colon between a verb and its object or complement • Incorrect: The materials used for the project include: steel, wood, and wire. • Correct: The materials used for the project include steel, wood, and wire. • Correct: The materials used for the project include the following: steel, wood, and wire.

31. INCORRECT USAGE OF COLONS • Do not use a colon between a preposition and its object • Incorrect: Evacuees went to: San Antonio, Dallas, Fort Worth and Austin. • Correct: Evacuees went to San Antonio, Dallas, Fort Worth and Austin. • Do not use a colon following an introductory expression • Incorrect: The stores were out of supplies including: water, milk, and plywood. • Correct: The stores were out of supplies including water, milk, and plywood. • Do not use more than one colon in a sentence

32. PROOFREADING STRATEGIES • Read aloud. • Read with a cover. • Read as a reader rather than the writer. • Identify your common mistakes, and pay careful attention to those. • Use the tools on your computer (but don’t assume the suggestions are always correct).

33. NOW LET’S PRACTICE . . . . • Pass out examples of tax memos • Allow time for groups to critique the memos

34. GATHER THE FACTS Ross Lambeth owns a corner lot on which a dilapidated rental building is situated. The building, which has been fully depreciated using the straight-line method, has a tax basis of zero. Recent flooding in the area has damaged the building to such an extent that it can no longer be rented without renovation, and Ross believes it is about to be condemned by municipal authorities as unsafe.

35. The lot is located in a prime area of commercial development and, if it were not for the building, would be worth a considerable amount. As such, Ross is considering donating the building to the local fire department for use in the testing of new fire equipment and conducting fire drills and rescue training. After the fire department finishes using the building, Ross plans to push over the chimney and remove the charred foundation and debris, leaving the lot vacant. Ross would like to receive a tax deduction from the donation.

36. Currently, the lot and building are appraised at $70,000 and $20,000, respectively. After removal of the building, however, Ross estimates the lot will be worth $110,000. Donation = Tax savings Land value = $40,000 increase

37. RESEARCH THE SITUATION Regulations Internal Revenue Code Judicial Decisions Revenue Rulings

38. WRITE THE TAX MEMO The tax memo contains: • Client • Relevant facts • Specific issues • Conclusions • Support • Actions to be taken • Preparer

39. FILE MEMO 1 October 19, 2006 Client Ross Lambeth, Deductibility of Contribution of The Right To Use Property The Donor Owns To Local Fire Department. Overuse of capitalization Focuses on contribution of right to use property rather than contribution of property

40. depreciated Set means “to place something in position” Sitmeans “to be situated or located” Relevant Facts Ross Lambeth owns a rental building and the land it sets on. The building is worth $20,000 and a formal appraisal has been done. The building has a fully depreciate, tax basis of zero. Ross wants to donate the building to the fire department for use in the testing of new fire equipment and training. sits X Too brief; fails to include all relevant facts.

41. Specific Issue Can Ross receive a tax deduction from the donation? Does not clarify whether the donation would be for the building or lot Does not address the amount of the deduction

42. Conclusion Ross’ contribution of the right to use his building is nondeductible. Reaches wrong conclusion

43. Section, § or Sec. Singular verb; plural noun Support IRC §170(a) and Reg. 1.170A-1 allows for a deduction of any charitable donation given within the year of contribution of an individual. Additionally, IRC §170(c) defines qualified charitable contributions, including a contribution to a subdivision of the government for public use. Additionally, ¶K-305 of IRC §170(e) and Reg. §1.170A-1(c) defines the deduction in the case of a charitable contribution to include a capital asset’s deduction which is the fair market value of that property. Awkward Repetitious Cite to RIA, not IRC

44. Relevance is not explained Reg. §170A-7 disallows the deduction of a partial interest in property. A partial interest in property includes the usage of the property free of rent. The rent free contribution is not deductible. In Ottawa Silica Co., 82-1 USTC, an individual donated land for the use of a public school. The donation was disallowed because the individual received some economic benefit from the increase in the value of his property by the construction of roads by the donee. Reg. §1.170A-7 Incomplete cite Italicize case name

45. Actions To Be Taken Prepare letter, review results with client. Preparer Student 1 Incomplete

46. FILE MEMO 2 October 19, 2006 Client Ross Lambeth, Deductibility of Building Donation Sacrifices accuracy and completeness for conciseness

47. Repetitious and wordy Relevant Facts Ross Lambeth owns a lot on which a dilapidated rental building is situated. They are appraised at $20,000 and $70,000, respectively. The rental building has a zero tax basis and is severely damaged. The land would increase in economic value if the building was removed. Ross wants to donate the the building to the fire department that will destroy the building while in use. X Lot is appraised at $70,000; building at $20,000

48. Specific Issues Can the building be donated and a deduction taken for the charitable contribution to the local fire department? If the building alone can be donated, without the land (fee simple) then technical issues arise as to how to structure the title to the building such that the ownership of the foundation and chimney remain with Mr. Lambeth. Or is this more properly considered a use of the building rather than a donation? Additionally, is the building, having been severed from the land for the purpose of the donation, now considered tangible personal property? Lacks focus; too many minor issues identified

49. According to the facts, the building is appraised for $20,000 Awkward Conclusions Ross Lambeth can deduct the $200,000 donation in the nature is a long-term capital asset distribution, treated as an itemized deduction and limited to the lesser of 30 percent of his adjusted gross income, or an amount equal to 50 percent of adjusted gross income, reduced by contributions qualifying for the 50 percent limitation. No support for conclusions What is a long-term capital asset distribution? Can a donation qualify?

50. Unnecessarily long sentences Support IRC Section 170(b)(1) defines the contribution rules for individuals. IRC Section 170(a)(3) defines the timing of contribution of a future interest and the unwinding of all rights to what, given the definition of “severability” in the code, in this case becomes tangible personal property – the building, having been severed from the foundation and masonry of the structure. At the time of final resolution of all the ownership interests and options of any conceivable “fee simple” possible ownership transfer to and back from the fire department of the building, the donation would have a value of zero for the building, and a cost associated with removing the foundation and the rubble. Though it is not the question under discussion, there will be a tax treatment for the cost to prepare the land for use, with which we would be happy to assist our valued client. Patronizing