How to Write a Tax Research Memo (Format, Examples, and Templates)

Most tax professionals know how to find the answer to a client's question. They can track down the right IRC section, pull the relevant Treasury Regulations, and even locate a supporting Tax Court case. Where things fall apart is in the writing. 

Turning a pile of research into a tax research memo that holds up under partner review, documents the firm's position for the file, and communicates something the client can actually act on is a skill that rarely gets taught in any formal way.

If you learned memo writing by copying whatever format your first firm used (or guessing until a reviewer sent it back covered in red ink), this guide is for you. It covers what goes into each section, how to structure the analysis, how to cite IRC sections and other tax authorities correctly, and how to adjust your tone for internal memos versus client-facing letters.

Key Takeaways

• A tax research memo follows a five-part structure: facts, issues, conclusion, analysis, and authorities

• Internal file memos and client letters serve different purposes, require different tone and citation depth

• Proper citation format varies by authority type (IRC sections, Treasury Regulations, Revenue Rulings, case law)

• The analysis section is the hardest to write and the most important to get right

• AI research tools can generate first drafts with proper citations in seconds, but professional judgment still drives the final product

What Is a Tax Research Memo?

A tax research memo is a written document that records the facts of a tax question, identifies the relevant legal issues, analyzes applicable tax authorities, and presents a supported conclusion. Tax professionals use research memos to document their work, support filing positions, communicate findings to clients, and protect both the practitioner and the firm in case of future IRS scrutiny.

Think of it as the bridge between raw research and professional advice. You might know the answer to a client's tax question intuitively, but the memo is where you prove it with citations to the Internal Revenue Code, Treasury Regulations, court decisions, and IRS guidance that back up your position. It's also your evidence of due diligence under Circular 230 if a filing position is ever challenged.

Research memos serve two distinct audiences:

• Internal file memos (memo to file) stay within the firm and document the research process, the authorities consulted, and the reasoning behind your conclusion.

• Client letters translate those same findings into plain language the client can understand and act on, typically without granular citation detail.

The Five Parts of a Tax Research Memo

While firms sometimes use slightly different formats, the standard tax research memo includes five core sections. Some practitioners prefer a three-part structure (introduction, analysis, recommendations) or the IRAC method borrowed from legal writing (issue, rule, application, conclusion). 

All of these cover the same ground. The five-part format below is the most widely used in accounting practice because it front-loads the conclusion, which is what reviewers and decision-makers need first.

1. Facts

State the relevant facts of the client's situation clearly and completely. Include only facts that bear on the tax question, and leave out extraneous details, but don't omit anything that could change the analysis.

Good fact statements are specific. Instead of writing "the taxpayer runs a small business," write "the taxpayer operates a single-member LLC providing consulting services, reporting $340,000 in net income on Schedule C for the 2025 tax year." Dates, dollar amounts, entity types, filing statuses, and transaction structures all matter here.

One common mistake is mixing facts with assumptions. If you're assuming something because the client hasn't provided certain information, label it clearly. Write "assuming the taxpayer materially participates in the activity" rather than stating it as an established fact.

2. Issues

Frame the tax questions your memo will address. Each issue should be stated as a specific, answerable question tied to the facts.

Weak issue statement: "What are the tax implications of the client's business?"

Strong issue statement: "Does the taxpayer's consulting income qualify as qualified business income eligible for the 20% deduction under Section 199A, given that consulting is a specified service trade or business and the taxpayer's taxable income exceeds the phase-in threshold?"

If your memo covers multiple issues, number them and tackle each one separately in the analysis section. A tax research memo can also address a single issue, and many of the best memos do exactly that, going deep on one focused question rather than spreading thin across several.

3. Conclusion

Place your conclusion before the analysis, not after it. This is one of the most common structural mistakes practitioners make, and it's worth understanding why the conclusion comes early.

Partners, managers, and clients reading your memo need the bottom line first. A busy partner reviewing your work during tax season doesn't want to wade through three pages of analysis before finding out whether the deduction applies. Lead with the conclusion, and let readers who need the supporting detail find it in the analysis section that follows.

Write each conclusion as a direct, declarative statement that answers the corresponding issue. Avoid hedging language like "it appears that" or "it is possible that" unless genuine uncertainty exists, and if it does, say so plainly and recommend next steps.

4. Analysis (Discussion)

This is the section where most memos fall apart, and it's also where the real value lives. The analysis connects your facts to the relevant tax authorities and explains how you reached your conclusion. It should read like a logical argument, not a list of statutes.

Start with the primary authority (usually the IRC section), then layer in supporting sources: Treasury Regulations that interpret the code, Revenue Rulings that apply it to similar situations, and court cases that have tested it. Address counterarguments or unfavorable authority directly rather than ignoring them, because a memo that only cites favorable sources looks incomplete to an experienced reviewer.

When the law is unsettled, say so. Point to conflicting authorities, circuit splits, or areas where the IRS has not issued guidance, and explain what that ambiguity means for your client's position.

A few structural habits that make this section stronger:

• Lead each paragraph with a point, not a citation. Open with a statement that advances your argument, then bring in the supporting authority.

• Cite as you go. Weave references into the analysis where they support specific assertions rather than saving everything for a list at the end.

• Know the difference between binding and persuasive authority. The IRC and Treasury Regulations carry the force of law. Revenue Rulings represent the IRS's official position but don't bind courts. Private Letter Rulings apply only to the requesting taxpayer and can't be cited as precedent. Your reader needs to know how much weight each source carries.

• Address the "so what." Don't stop at what the law says. Explain what it means for the client: does the deduction apply, how much is it worth, what documentation should they maintain, and what's the risk if the IRS disagrees.

5. Authorities Cited

List every authority referenced in your memo. Some firms include this as a formal bibliography at the end, while others weave all citations into the analysis and skip the separate list entirely. Follow your firm's convention.

Either way, the authorities section serves as a quick reference for anyone who needs to verify your sources or update the analysis down the road. Organize it by type: primary sources (IRC, regulations), administrative sources (Revenue Rulings, Revenue Procedures, PLRs), and judicial sources (court decisions).

How to Write a Tax Research Memo: Step by Step

Writing a strong memo isn't about following a rigid template. It's about building an argument. Here's the process that experienced practitioners typically follow.

Step 1: Gather and verify all relevant facts 

Before you start researching, make sure you have the complete picture. Missing a single fact (like the taxpayer's filing status or the date of a transaction) can change the entire analysis, so go back to the client or engagement team if you have gaps.

Step 2: Identify the specific tax issues 

Translate the client's situation into precise legal questions. Well-defined issue statements keep the research focused and prevent scope creep.

Step 3: Research the applicable authorities 

Start with the IRC section, then work outward to regulations, rulings, and case law. Use a research platform that provides full-text access to primary sources rather than relying on summaries or secondary commentary alone.

Step 4: Organize your authorities 

Before writing, map which authorities support your position, which cut against it, and which are ambiguous. This step prevents the most common analytical mistake: cherry-picking only favorable authority.

Step 5: Write the conclusion first 

Once you've completed your research, you should know the answer. Write it down before you write anything else, because this forces clarity and gives the rest of your memo a clear direction.

Step 6: Build the analysis section 

Work through each issue methodically. Connect facts to law, address counterarguments, and explain your reasoning without assuming the reader knows the law as well as you do after hours of research.

Step 7: Draft the facts and issues sections 

These are often easier to write after the analysis, because the research process may have surfaced new issues or revealed which facts are truly material.

If you want to condense steps 3 through 6 into a single query, use Bizora to extract tax data and draft memos in minutes.

Tax Research Memo Format: Internal File Memo vs. Client Letter

One of the most important decisions you'll make is whether you're writing an internal memo or a client-facing document. They serve different purposes, follow different conventions, and require different levels of detail.

Element	Internal File Memo	Client Letter
Audience	Partners, managers, other staff within the firm	The client (business owner, CFO, individual taxpayer)
Purpose	Document the research process and support the firm's filing position	Communicate findings and recommendations the client can act on
Tone	Technical, precise, objective	Professional but accessible, translates tax jargon
Citation depth	Full citations to IRC sections, regs, rulings, case law throughout	Minimal or no code citations; reference "current tax law" or "IRS guidance"
Length	Thorough (as long as needed to document the analysis)	Concise (focus on the answer and practical next steps)
Legal terminology	Uses statutory language freely	Explains concepts in plain English
Counterarguments	Addresses unfavorable authority directly	May omit or briefly reference contrary positions
Format	Memo format with headers: Facts, Issues, Conclusion, Analysis	Letter format with salutation, body paragraphs, closing
Privileged?	Generally part of workpapers (not privileged)	May be discoverable; be cautious with speculative language

When you're writing for the client, your job shifts from documenting the law to explaining what it means for their specific situation.

A client doesn't need the citation for Treasury Regulation Section 1.199A-5(b)(2)(xi). They need to know whether their consulting income qualifies for the deduction and what they should do about it.

That said, some clients (especially in-house tax teams at larger companies) want the full technical treatment. Ask about the audience's preference before defaulting to simplified language.

How to Cite Tax Authorities in a Research Memo

Proper citation builds credibility and makes your memo verifiable. Different types of tax authority follow different citation conventions, and the table below covers the most common sources you'll reference.

Authority Type	Citation Format	Example
Internal Revenue Code	Section [number], subsection in parentheses	Section 199A(a)
Treasury Regulation (Final)	Treas. Reg. Section [number]	Treas. Reg. Section 1.199A-5(b)(2)(xi)
Treasury Regulation (Proposed)	Prop. Treas. Reg. Section [number]	Prop. Treas. Reg. Section 1.199A-5
Treasury Regulation (Temporary)	Temp. Treas. Reg. Section [number]	Temp. Treas. Reg. Section 1.199A-5T
Revenue Ruling	Rev. Rul. [year]-[number]	Rev. Rul. 2019-24
Revenue Procedure	Rev. Proc. [year]-[number]	Rev. Proc. 2024-34
Private Letter Ruling	PLR [number]	PLR 202401001
Tax Court (Regular)	[Name] v. Commissioner, [volume] T.C. [page] ([year])	Smith v. Commissioner, 155 T.C. 135 (2020)
Tax Court (Memo)	[Name] v. Commissioner, T.C. Memo. [year]-[number]	Jones v. Commissioner, T.C. Memo. 2023-45
Circuit Court	[Name] v. Commissioner, [volume] F.3d [page] ([Circuit] [year])	Altera Corp. v. Commissioner, 941 F.3d 1200 (9th Cir. 2019)
IRS Notice	Notice [year]-[number]	Notice 2024-12
Chief Counsel Advice	CCA [number]	CCA 202402010

In body text, write out "Section" rather than using the section symbol (§). Italicize case names (Smith v. Commissioner is the standard convention). Always include the year for rulings, procedures, and court decisions so your reader can assess how current the authority is. 

And keep in mind that a Revenue Ruling represents the IRS's official position but doesn't carry the force of law the way the IRC or Treasury Regulations do, while a Private Letter Ruling applies only to the taxpayer who requested it and can't be cited as precedent (though it offers insight into how the IRS is thinking about an issue).

That distinction between binding and persuasive authority matters for how you structure the analysis. Here's how tax authorities rank from most to least authoritative:

Authority Level	Sources	Weight
Primary (Statutory)	Internal Revenue Code	Highest: the law itself
Primary (Regulatory)	Treasury Regulations (final)	Force of law; courts give strong deference
Primary (Judicial)	Supreme Court decisions	Binding on all courts and the IRS
Primary (Judicial)	Circuit Court decisions	Binding within that circuit
Primary (Judicial)	Tax Court regular decisions	Significant weight; precedential
Primary (Judicial)	Tax Court memo decisions	Less weight; fact-specific
Administrative	Revenue Rulings, Revenue Procedures	Official IRS position; not binding on courts
Administrative	Private Letter Rulings, TAMs, CCAs	Insight into IRS thinking; not precedential
Secondary	Tax treatises, journal articles, CPA firm guidance	Background only; never cite as authority

When your conclusion rests on a Revenue Ruling alone, that's thinner support than if you can also point to a Treasury Regulation or a favorable court decision. Build the analysis around the strongest authority available, and flag situations where only administrative guidance exists.

Tax Research Memo Example: Section 199A Qualification

Here's a sample internal file memo addressing a common question practitioners face. This example demonstrates the five-part structure, proper citation format, and the kind of analytical depth that holds up under review.

MEMORANDUM

To: Tax File From: [Practitioner Name], CPA Date: February 14, 2026 Re: Section 199A Deduction Eligibility for Brightline Consulting LLC

Facts

Taylor Morgan is the sole member of Brightline Consulting LLC, a single-member LLC that provides management consulting services to mid-market companies. The LLC is treated as a disregarded entity for federal tax purposes. For the 2025 tax year, Brightline reported $285,000 in net qualified business income on Schedule C. Morgan files as married filing jointly, and the couple's combined taxable income before the Section 199A deduction is $364,000. Morgan spends approximately 1,800 hours per year working in the consulting business and has no employees.

Issues

1. Does Brightline Consulting LLC's management consulting income constitute a "specified service trade or business" (SSTB) under Section 199A(d)(2)?

2. If so, is Morgan eligible for the Section 199A deduction given the couple's taxable income is below the threshold amount for joint filers?

Conclusions

1. Yes. Management consulting is an SSTB under Section 199A(d)(2) and Treas. Reg. Section 1.199A-5(b)(1)(vi), which lists consulting as a specified service activity. Treas. Reg. Section 1.199A-5(b)(2)(vii) defines consulting for this purpose as providing advice and counsel to clients to assist in achieving goals and solving problems.

2. Yes. Because the Morgans' taxable income of $364,000 falls below the threshold amount of $394,600 for joint filers in 2025 (per Rev. Proc. 2024-40), the SSTB limitation does not apply. Morgan is eligible for the full 20% QBI deduction, subject only to the overall cap of 20% of taxable income (reduced by net capital gain, if any) under Section 199A(a)(1)(B).

Analysis

Section 199A(a) provides a deduction of up to 20% of qualified business income (QBI) from a qualified trade or business conducted through a pass-through entity or sole proprietorship. However, Section 199A(d)(1)(A) limits this deduction for income earned from a "specified service trade or business" when the taxpayer's taxable income exceeds certain thresholds.

Section 199A(d)(2) defines an SSTB as any trade or business involving the performance of services in certain listed fields, including consulting. Treas. Reg. Section 1.199A-5(b)(1)(vi) expressly lists consulting as a specified service activity, and Treas. Reg. Section 1.199A-5(b)(2)(vii) further defines it as the provision of advice and counsel to clients to assist in achieving goals and solving problems. The regulation specifically excludes consulting that is embedded in or ancillary to the sale of goods or performance of services on behalf of the client.

Brightline Consulting LLC provides management consulting as its primary activity. The services involve advising clients on strategy, operations, and management decisions rather than performing services on behalf of clients. Under the regulatory definition, this squarely qualifies as consulting within the SSTB classification.

Regarding the deduction limitation, Section 199A(d)(3) establishes threshold amounts below which the SSTB designation is disregarded entirely. For 2025, the threshold amount for married filing jointly is $394,600, with a complete phase-out at $494,600 (per Rev. Proc. 2024-40, Section 3). Because the Morgans' taxable income of $364,000 falls below the $394,600 threshold amount, the SSTB limitations under Section 199A(d)(1)(A) do not apply.

Therefore, Morgan is eligible for the full Section 199A deduction calculated as 20% of QBI. Because the Morgans' taxable income is below the threshold amount, the W-2/UBIA limitation under Section 199A(b)(2)(B) is disregarded per Section 199A(b)(3)(A), and the SSTB limitation is likewise inapplicable. (If taxable income were within the phase-in range, an applicable percentage of QBI, W-2 wages, and UBIA from an SSTB would be taken into account on a reduced basis per Treas. Reg. Section 1.199A-5(a)(2). That provision does not apply here.)

The calculated deduction is 20% of $285,000, or $57,000. Under Section 199A(a)(1)(B), the deduction cannot exceed 20% of the couple's taxable income reduced by net capital gain. With no stated capital gains, the cap is 20% of $364,000, or $72,800. Because $57,000 is less than $72,800, the QBI-based amount is the binding limit and the full $57,000 deduction is allowed.

Authorities Cited

• Section 199A(a), (b)(2), (b)(3)(A), (d)(1)(A), (d)(2), (d)(3)

• Treas. Reg. Section 1.199A-5(a)(2), (b)(1)(vi), and (b)(2)(vii)

• Rev. Proc. 2024-40, Section 3 (2025 inflation-adjusted threshold amounts)

This sample shows several things worth noting. The conclusion directly answers each issue statement, the analysis moves from the general rule to the specific application while citing authority at each step, and the memo addresses both issues raised in the facts rather than leaving the phase-in question unresolved.

Common Mistakes That Undermine Your Tax Research Memo

After reviewing thousands of memos (and writing plenty of flawed ones early in our own careers), these are the errors that come up most often.

1. Burying the conclusion: If your reader has to scroll to page four to find out whether the deduction applies, the memo isn't serving its purpose. The conclusion goes after the issues and before the analysis, every time.

2. Over-citing or under-citing: Some memos cite every sentence as if the writer is defending a dissertation, while others state legal conclusions with zero support. Cite where it matters: when you're stating a legal rule, applying a regulatory standard, or referencing a factual finding from case law.

3. Confusing facts with assumptions: If you don't know the client's exact adjusted gross income, don't write "the taxpayer's AGI is $400,000." Write "assuming AGI of approximately $400,000 based on the 2024 return." Reviewers lose trust quickly when they can't tell what's been confirmed versus estimated.

4. Ignoring unfavorable authority: If a Tax Court case contradicts your position, address it. Explain why it's distinguishable from your client's facts, or acknowledge that the issue is unsettled. A memo that pretends contrary authority doesn't exist is worse than one that confronts it directly.

5. Writing the analysis as a research dump: The analysis section isn't a place to prove you found every source in the database. Each paragraph should advance your reasoning, and if an authority doesn't directly support or challenge your conclusion, leave it out.

6. Using imprecise citations: Writing "per the IRC" or "under IRS rules" when you mean "Section 162(a)(1)" undermines your credibility. Specific citations let readers verify your work and signal that you've actually read the primary source.

Your Memo Is Only as Good as the Research Behind It

The structure of a tax research memo is straightforward: facts, issues, conclusion, analysis, authorities. None of that is complicated. What separates a memo that protects your client and your firm from one that falls apart under scrutiny is the quality of the research and the clarity of the reasoning.

That means framing issues precisely enough to research and answer, building the analysis around primary authority rather than secondary commentary, and not shying away from counterarguments when they exist. It means writing for the reader who needs to act on your conclusion, not for the reader you're trying to impress with how many sources you found.

If the research and drafting process is eating into your billable hours (especially during busy season), it doesn't have to. Bizora generates citation-backed tax research memos in seconds, with full transparency into how each answer was reached. Every citation links to the actual primary source so you can verify before you sign off.

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Frequently Asked Questions

What is a tax research memo?

A tax research memo is a formal document that records the facts of a tax question, identifies the legal issues, analyzes relevant tax authorities (IRC sections, Treasury Regulations, court cases, IRS rulings), and presents a supported conclusion. It serves as the official record of the practitioner's research and reasoning.

What format should a tax research memo follow?

The standard format includes five sections: facts, issues, conclusion, analysis, and authorities cited. Some firms use a three-part structure (introduction, analysis, recommendations) or the IRAC method (issue, rule, application, conclusion). The five-part format is most common in accounting practice because it places the conclusion before the analysis.

What is the difference between an internal memo and a client letter?

An internal file memo stays within the firm, uses full technical citations, and documents the complete research process. A client letter translates the findings into accessible language, minimizes legal jargon and code citations, and focuses on practical recommendations the client can act on.

How do you cite the Internal Revenue Code in a tax memo?

Write "Section" followed by the code number and applicable subsections in parentheses. For example: Section 199A(a), Section 162(a)(1), or Section 1031(a)(1). Use the written word "Section" in body text rather than the section symbol (§).

Can a tax research memo address just one issue?

Yes. Many memos address a single, focused question. A well-researched memo on one issue with thorough analysis is more valuable than a surface-level memo that tries to cover five issues in the same number of pages.

Why does the conclusion come before the analysis?

The conclusion comes first because partners, managers, and clients need the bottom line immediately. Placing the conclusion early respects the reader's time and gives them context for the detailed analysis that follows. This is standard in professional practice, even though academic formats sometimes place the conclusion last.

Can AI tools write a tax research memo?

AI tools can generate first drafts of tax research memos with proper structure and citations, significantly reducing the time required. However, practitioners must verify every citation against primary sources and apply their own professional judgment to the analysis. Purpose-built tax research tools that cite authoritative sources are far more reliable for this purpose han general AI chatbots, which frequently fabricate citations.