Second Chance for Depreciation - Analyzing Tax Planning Opportunities After Asset Disposition

Case Synopsis

This case presents a step-by-step interactive tax research training program that begins with the basics (basis, recovery of cost, recapture, capital gains, Sec. 1231 gains, etc.) and introduces gradually increasing tax law complexity in conjunction with each of ten practice sets.  The series of practice sets emphasize a “learn a little and then use it” approach to assure that each layer of technical material and increasingly sophisticated analysis is mastered before the next is attempted. Each practice set utilizes a number of “Test Yourself” questions that provide immediate feedback to students. Several of the practice sets employ spreadsheets using templates with built-in interactive self-correcting feedback.  These active learning components, coupled with feedback, provides an efficient means of fixing the technical understanding of the students and polishing their spreadsheet skills.  The feedback feature prevents them from proceeding too far down the wrong paths.  The materials offer an opportunity for the instructor to customize the level of rigor by adding elements or omitting some guidance in the assignments.

As the student gains sophistication in the understanding of primary authority, the case introduces the influence of the courts, conflicts between jurisdictions, interpretive and legislative regulatory authority.  This complex interrelationship is demonstrated as the practice sets track the interactive development of two related but separate areas of the tax law and culminates in the revelation of the almost certainly unintended tax planning opportunities that results. 

The penultimate practice sets introduce ethical issues of professional responsibility, due care, confidentiality, disclosure, and conflicts of interest by a practitioner or within a firm.  The case concludes with a practice set that utilizes the spreadsheet skills and understanding of the technical rules developed thus far to create a tax planning model and draft a recommendation.  This last practice set replicates the kind of present value analysis commonly assigned to relatively new staff in a moderately sophisticated tax practice.