Your duty is to write a draft internal memorandum addressing the issues raised in the interview.Also prepare a draft letter to the client based on your memo.
Your memorandum should be 1 to 3 pages; stating the essential facts, the issues, the conclusions. Also include any provision(s) of the internal Revenue Code that support your suggested conclusion. You may also include any other helpful administrative authority (IRS regulations, IRS rulings, court decisions, etc.) that you find in your research.
Your client letter should be a one-page letter presenting your memorandum findings in a simple and clear manner that is understandable to the client.
QUESTION:
Client is unemployed and a full time student at NEIU. During the year he received:
A tuition scholarship
A loan from his grandparents
Payment for painting a friend’s house
Cash dividends from stock that was given to him from his grandparents
He found a $100 bill in a library book
Analyze the taxability of these circumstances.