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Norse Co, a calendar-year taxpayer, received a check for $180,000 in payment for services rendered as a commissioned sales agent near the end of 2017. In 2018, the customer discovered that the commission was incorrectly computed on the sale, and Norse Inc. refunded $30,000 of the $180,000 to the customer.
Norse Inc. (a C corporation) was in a 35% tax bracket in 2017, but in 2018 due to the Tax Cuts and Jobs Act is now in a 21% bracket in 2018. Since Norse was taxed on the full $180,000 under the claim of right doctrine, it may deduct the $30,000 in 2018, but this will not “make them whole.”
Choose one of the situations above. Please research and identify the authority which would provide them relief.
1. Prepare a tax research memo using the format shown in attached doc.
2. Identify the issue in one of the tax situations
3. Identify statutory authority
4. Identify regulatory authority
5. Cite primary authority
6. Use proper citation in end notes to the memo