If so, what is the character of the payment? Is it a reduction of tax basis of investment assets, ordinary income, or short or long-term capital gain income?
In addition, research and address what the income tax consequences are to the investment advisor (the payor) in making the settlement payment. Is the payment deductible, and if so, what is the character of the deduction?
Hint: Recall that income tax consequences in general are symmetrical; meaning that if one taxpayer for a given transaction has to report income, then the other taxpayer to the transaction generally has a deduction.
Prepare a tax research memorandum to answer the questions raised by your client. State any assumptions you make. Your written memorandum should be no approximately six pages in length. Recall that proper format and content are of equal importance. Refer to the Sample Tax Memorandum for guidance on the proper format. This assignment will be graded using the rubric below.
Charge MEMORANDUM Title: Tax Memorandum Asked for By: Maritza Submitted By: Date Submitted: Actualities Maritza an unmarried U.S citizen living in New York City as of late got paid $150,000 by her…