As part of the analytic process, the researcher should decide if the authority requires him or her to make a factual judgment or an evaluative judgment.
In making a factual judgment, the researcher compares the authority to a set of facts. Assuming that the facts are complete and accurate, the researcher can provide a definitive answer to the research question.
Researchers are required to make evaluative judgments when the relevant authority relates to a conclusion inferred from a set of facts, rather than to the facts themselves. By definition, conclusions are subjective; different observers may draw different conclusions from the same facts. A researcher who must draw a conclusion to complete a research project can never be sure that such conclusion will go unchallenged by the IRS. Therefore, the researcher should never give an unqualified answer to a research question requiring an evaluative judgment.
At some point in the research process, even an expert may discover that he or she does not have all the facts necessary to complete the analysis of the client’s transaction. In such case, the researcher must repeat Step 1 by obtaining additional information from the client. Oftentimes the additional information suggests additional tax issues and research questions that the researcher must address. A researcher may have to repeat Steps 1 through 4 several times before he or she is satisfied with the analysis.
Where unresolved issues exist, the researcher might inform the client about alternative possible outcomes of each disputed transaction, and give the best recommendation for each. If the research involved an open fact situation, the recommendation might detail several alternative course of future action, (for example, whether to complete the deal, or how to document the intended effects of the transaction). In many cases, the researcher may find it appropriate to present his or her recommendation of the "best" solution from a tax perspective, as well as one or more alternative recommendations that may be much more workable solutions. In any case, the researcher will want to discuss with the client the pros and cons of all reasonable recommendations and the risks associated with each course of action.