Chapter 2

Question 1

What are the two broad categories of tax authority?

Answer 1

Primary authorities and secondary authorities.

Question 2

What are primary authorities?

Answer 2

Official sources of tax generated by the legislative (statutory), judicial and executive/administrative branches.

Question 3

Statutory Authorities

Answer 3

Internal Revenue Code, Committee Reports: Senate Finance Committee Report, House Ways and Means Committee Report.

Question 4

Administrative Authorities

Answer 4

Final Regulation, Temporary Regulation, Proposed Regulation, Revenue Ruling, Revenue Procedure, Private Letter Ruling, Technical Advice Memorandum.

Question 5

Judicial Authorities

Answer 5

US Supreme Court, US Circuit Court of Appeals, US Tax Court - regular decision, US Tax Court - memorandum decision, US Court of Federal Claims, US District Court.

Question 6

What are secondary authorities?

Answer 6

Unofficial tax authorities that interpret and explain primary authorities, such as tax services, tax articles from professional journals and law reviews, newsletters and textbooks.

Question 7

What are the three legislative tax authorities?

Answer 7

US Constitution, Internal Revenue Code, tax treaties.

Question 8

Constitution

Answer 8

16th Amendment provides Congress the ability to tax income directly, from whatever source derived, without apportionment across the states.

Question 9

Internal Revenue Code

Answer 9

Second (and main) statutory authority. Same authoritative weight as tax treaties and Supreme Court rulings. Unique in that all authorities, administrative and judicial (not tax treaties and Constitution) can be seen as interpretations of it. Congress enacts legislation every year that changes the code.