AI for tax preparers and tax departments
Ultramarine Work drafts return pages, provision workpapers, research memos and notice responses from the client files you already keep, and every figure names the source file it came from.
Sparrowgate-repair-memo.docxExamplePipeline Overhaul Costs: Deductible Repair or Capital Improvement
Conclusion
Of the $6.2 million spent in 2025 on process piping at the Cedar Falls plant, it is more likely than not that $4.1 million is a deductible repair under §162 and that $2.1 million must be capitalized under §263(a). Our confidence is moderate, because the result depends on treating each production line, rather than the piping alone, as the unit of property.
Analysis
Under Treas. Reg. §1.263(a)-3(e)(3)(ii), each production line is a unit of property and its piping is a component. Replacing worn sections with like-kind stainless pipe, about 30% of each line’s piping by length, keeps the lines in ordinarily efficient operating condition and does not replace a major component. The new clean-in-place loop adds a capability the plant did not have, which is a betterment under §1.263(a)-3(j).
CheckedCheck: the 30% figure ties to the contractor’s scope, and all three regulation cites are current.
How it works
- 1
Start with the client folder
The folder takes the trial balance export, last year’s return as a PDF, the W-2s, 1099s and K-1s exactly as received, IRS notices and prior-year workpapers, all kept under your own folder names.
- 2
Ask for the deliverable
It hands back Excel workpapers with live formulas, Word memos and draft return pages. Whatever it could not find or reconcile, it says so plainly rather than filling the gap.
- 3
Review and sign
Every number traces to a file in the folder, so you review every file it touched instead of rebuilding the workpapers. The signing preparer makes the call and e-files through your own software.
Ask it for
“Build the Chen 1040 workpapers from the organizer and last year’s return, enter each K-1 box by box, and list every document that is missing.”
Chen-1040-workpapers.xlsx“Build the M-1 for Northland’s 2025 trial balance and flag every adjustment that lacks support. If Schedule L assets pass $10 million, build the M-3 too.”
Northland-M1-M3-2025.xlsx“Draft a memo on whether the $6.2M Sparrowgate Foods pipeline overhaul is a repair or an improvement to capitalize, with authorities and a confidence level.”
Sparrowgate-repair-memo.docx“Reconcile each 1099 in the CP2000 to the 2022 return, compute the additional tax, and draft the response, with the accuracy penalty argued on reasonable cause.”
CP2000-response.docx“Start the Q3 ASC 740 provision from the trial balance and prior-year rollforward, and list the rate rec and valuation allowance judgments for review.”
Q3-ASC740-provision.xlsx“Estimate the Virginia sales tax exposure from Wayfield’s online sales since 2022 against the $100,000 or 200-transaction thresholds, and lay out the VDA steps.”
VA-exposure-VDA-plan.xlsx
Inside the Tax mode
Individual tax return prep
Prepares the 1040 from the organizer, keeps the Form 8867 trail current for EITC and CTC claims, and lists what you must ask the client before filing.
Business tax return prep
For 1120, 1120-S and 1065 returns it builds the workpapers, from tax depreciation and capital accounts to the M-1 and M-3 that land on the return.
Fiduciary and estate returns
It computes DNI and fiduciary accounting income, tracks basis across the trust or estate, and drafts the 1041, 706 and 709 pages with their support.
Tax projection and estimates
From the actuals to date it projects year-end income and sets quarterly estimates with each safe harbor check shown.
Tax research memo
The memo comes back in your format: the issue, the Code, regulation and case authorities, the analysis and a conclusion with a confidence level.
Legal authority verification
It verifies every case, regulation and ruling a memo relies on, and flags the ones it cannot confirm for the reviewer.
Tax notices exams and appeals
When a CP2000 or an IDR arrives, it reconciles the notice to the return and then drafts the response, protest or Appeals memo.
IRS collection alternatives
Fills in the Form 433-A from pay stubs and bank statements, then sizes the installment agreement or offer against the IRS allowable expense standards.
State income tax nexus and apportionment
The nexus review tests P.L. 86-272 protection, and the apportionment calculation sources sales state by state.
Income tax provision
Book-to-tax bridge, deferred rollforward, rate rec, valuation allowance analysis and footnote drafts make up the ASC 740 provision.
International tax calculations
Computes NCTI, FDDEI, Subpart F and the foreign tax credit limitation, and drafts the workpapers behind Forms 5471 and 1118.
Transfer pricing documentation
It reads the intercompany agreements, works the functional analysis and builds the benchmarking study and documentation report for a section 6662(e) defense.
Tax credits and incentives
Each business component gets the four-part test, QREs tie out to payroll and the ledger, and the Form 6765 Section G detail comes from the same numbers.
M&A tax structuring and diligence
Point it at the data room and it surfaces exposures, drafts the structure memo and models the elections, Section 382 limits and Section 1060 allocation.
Sales and use tax
Sizes economic nexus from the transaction data, checks product taxability by item and builds the exposure estimate, use tax accrual and VDA plan.
Property tax compliance and appeals
The fixed asset list becomes the BPP rendition, assessment notices are reviewed line by line, and the appeal file carries comparables and income exhibits.
Unclaimed property reporting
It measures uncashed checks and stale credits against state dormancy thresholds, then drafts the due diligence letters and the state escheat reports.
1099 preparation
Vendor data is cleaned first, W-9s go out and TIN matching runs next, then the reportable-payment flags and 1099-NEC and 1099-MISC drafts follow.
Small business bookkeeping
It works on the QuickBooks file you export, sorts out owner draws and miscoded accounts, and assembles the year-end package for your CPA.
- Office skills
- Excel, Word, PowerPoint, PDF
- Tools
- Read, edit and write files, Search files, Run code, Search and read the web, View images
- Connectors
- SharePoint, Google Drive, Gmail, and additional custom connectors
- House style
- Your fonts, layouts and rules, on every file
Who it’s for
Tax professionals at every level in corporate tax departments, CPA and tax firms and independent practices, covering income and indirect tax, including enrolled agents and seasonal preparers.
Questions
Will it invent citations or code sections?
No, its skills tell it to look up every case, regulation or ruling before it cites one. It flags any authority it cannot confirm and names what it could not find instead of guessing. You still read the authorities yourself before a memo leaves your desk.
Do our clients need a Section 7216 consent?
That call belongs to your firm and its counsel, because the IRS has not settled how the consent rules apply to AI tools. Two facts matter for that call: Ultramarine Work changes files only in the project’s folder, and the model runs on Paper Instruments’ servers, so the content it works on is sent there to be processed. Paper Instruments is SOC 2 Type II, and our security and compliance details are on our compliance page.
What do the IRS and AICPA standards ask of me?
They ask you to review before you rely. SSTS section 1.4, the AICPA’s standard on reliance on tools, says no answer can replace your judgment, and the IRS’s OPR guidance treats AI-drafted text as a draft whose facts, citations and calculations must be verified. Each figure in what it hands back points to its source, and whatever it could not reconcile is written out rather than papered over.
Where does our client data go?
Ultramarine Work changes files only in the project’s folder. When a request needs it, it can read files elsewhere on your computer, never passwords, keys or app data, and you can turn that off in settings. The model runs on Paper Instruments’ servers, so the content it works on is sent there to be processed. Paper Instruments is SOC 2 Type II, and our security and compliance details are on our compliance page.