Linda M. Lewis, Donor, Petitioner v. Commissioner of Internal Revenue, Respondent; Peter F. McDougall, Donor, Petitioner v. Commissioner of Internal Revenue, Respondent, T.C. Memo. 2026-58, Docket Nos. 2459-22, 2460-22 (July 20, 2026)

In estate planning, the premature termination of a trust can trigger unexpected gift tax consequences. In the consolidated cases of Linda M. Lewis v. Commissioner and Peter F. McDougall v. Commissioner, T.C. Memo. 2026-58, the United States Tax Court resolved a critical valuation dispute arising from the termination of a qualified terminable interest property (QTIP) trust. Having previously determined that the remainder beneficiaries made taxable gifts by allowing their father to receive the entirety of the trust's assets upon termination, the court was tasked with valuing those gifts.

The court’s opinion is highly technical, addressing the interplay between federal tax valuation statutes, such as I.R.C. § 7520 and I.R.C. § 2207A, and Washington state trust law. The Tax Court held that state law, rather than the actuarial tables of I.R.C. § 7520, governs the underlying property entitlements upon trust termination. Additionally, the court ruled that the value of the gifts must be reduced by the remainder beneficiaries' avoided obligation to reimburse the primary beneficiary for gift taxes under I.R.C. § 2207A(b). This article examines the facts, statutory framework, legal analysis, and key take-aways of this landmark decision for tax professionals.

Savannah Shoals, LLC v. Commissioner of Internal Revenue, No. 24-12661, (11th Cir. 2026).

Conservation easement deductions remain one of the most heavily litigated areas of federal tax law. For tax professionals, advising clients on these transactions requires not only a deep understanding of the strict statutory and regulatory rules under Internal Revenue Code Section 170, but also a mastery of the evidentiary and valuation principles applied by the courts. The recent decision by the United States Court of Appeals for the Eleventh Circuit in Savannah Shoals, LLC v. Commissioner underscores the high stakes of these disputes and provides critical guidance on how courts determine a property's "highest and best use" and evaluate competing expert testimony.

In this case, the taxpayer claimed a $23 million deduction for a conservation easement based on the theory that the property’s highest and best use was as an aggregate quarry. The Internal Revenue Service rejected the deduction in its entirety and imposed substantial penalties. The Tax Court agreed with the Commissioner, valuing the easement at a fraction of the claimed amount and sustaining a 40% gross valuation misstatement penalty. On appeal, the Eleventh Circuit affirmed the Tax Court’s decision, offering a detailed analysis of the legal and factual standards governing valuation. This article provides a technical breakdown of the case's facts, the taxpayer's arguments, the court's legal analysis, and the critical takeaways for tax practitioners.

South Delta Planning & Development District v. United States, Cause No. 4:25-cv-197-JDM-RP (N.D. Miss. July 15, 2026)

The plaintiff, South Delta Planning & Development District ("South Delta"), is a planning and development organization that sought refunds for payroll taxes by claiming eligibility for the Employee Retention Credit ("ERC"). In early 2023, South Delta submitted amended Form 941 payroll tax returns for five calendar quarters: the second and third quarters of 2020, and the first, second, and third quarters of 2021.

Initially, the Internal Revenue Service ("IRS") processed these amended returns and issued refund checks for four of the five quarters—specifically, both quarters in 2020 and the first two quarters of 2021. The IRS issued no refund for the third quarter of 2021.

In late 2023, the IRS made an administrative about-face. The Service disallowed the previously issued ERC refunds and assessed South Delta for the full amount of the refunds issued for the second and third quarters of 2020, plus interest and late penalties. While the IRS announced that similar assessments were forthcoming for the first and second quarters of 2021, no such assessments were ever issued. The IRS remained silent regarding the third quarter of 2021, for which it had never issued a refund.

To challenge these assessments in federal court, South Delta utilized the divisible tax rule. Rather than paying the entire assessment, which is the general rule for federal tax litigation under the Flora full-payment rule, South Delta paid the payroll taxes assessed for one employee in both of the disputed 2020 quarters. Following this payment, South Delta filed a refund complaint in the U.S. District Court for the Northern District of Mississippi.

Piton Holdings, LLC, David L. Hall, Partnership Representative v. Commissioner of Internal Revenue, 167 T.C. No. 4 (filed July 15, 2026)

In Piton Holdings, LLC v. Commissioner, 167 T.C. No. 4 (July 15, 2026), the United States Tax Court addressed several critical issues of first impression regarding syndicated conservation easements under the Bipartisan Budget Act of 2015 (BBA) centralized partnership audit regime. The decision provides a masterclass for tax professionals (CPAs and EAs) on the intersection of partnership tax accounting, valuation methodology, and civil tax penalties.

The court held that the fair market value of the conservation easement was $800,000, rather than the $41,635,000 claimed by the taxpayer. Furthermore, the court ruled that the partnership’s allocation of the noncash charitable contribution deductions to late-entering partners was improper as a matter of law because the contributions constituted "extraordinary items" under Treasury Regulation § 1.706-4(e), which must be allocated based on the exact time of day they occurred. Finally, the court upheld a 40% gross valuation misstatement penalty under Internal Revenue Code (I.R.C.) § 6662(h), rejecting both the taxpayer’s Seventh Amendment constitutional challenge and the adequate disclosure defense under I.R.C. § 6662(d)(2)(B)(ii).

Siemens Medical Solutions USA, Inc. & Consolidated Subsidiaries v. Commissioner, 167 T.C. No. 5 (2026)

In Siemens Medical Solutions USA, Inc. and Consolidated Subsidiaries v. Commissioner of Internal Revenue, 167 T.C. No. 5 (2026), the United States Tax Court addressed a critical conflict between the plain text of the Internal Revenue Code (IRC) and the administrative regulations promulgated by the Department of the Treasury. The case centered on the validity of Temporary Treasury Regulation § 1.245A-5T, specifically the "Extraordinary Disposition Rules," which limited the 100% dividends-received deduction (DRD) enacted under the Tax Cuts and Jobs Act (TCJA). This article provides a technical analysis of the case's facts, the taxpayer's request for relief, the court's statutory analysis, and the broader implications for tax professionals in the post-Loper Bright era.

James Wendelin Eiler and Kathryn Ann Eiler, Deceased v. Commissioner of Internal Revenue, 167 T.C. No. 3, July 14, 2026

For tax practitioners managing the tax consequences of litigation settlements, the characterization of attorney's fees is a critical issue that often dictates whether a client is left with a meaningful recovery or an unexpected tax liability. In Eiler v. Commissioner, the United States Tax Court addressed a significant issue of first impression: whether litigation settlement proceeds under the Fair Credit Reporting Act (FCRA) involving credit reporting inaccuracies constitute claims of “unlawful discrimination” under Internal Revenue Code (I.R.C.) Section 62(a)(20).

Historically, the Supreme Court’s landmark ruling in Commissioner v. Banks, 543 U.S. 426 (2005), established that a taxpayer’s gross income includes the portion of a litigation recovery paid to an attorney under a contingent fee arrangement. While Congress created an above-the-line deduction in I.R.C. Section 62(a)(20) to mitigate this harsh result for cases involving “unlawful discrimination” or civil rights enforcement, the Tax Court in Eiler strictly limited this exception. The court held that the taxpayers’ claims under the FCRA did not involve the enforcement of "civil rights" as contemplated by I.R.C. Section 62(e)(18)(i), rendering the attorney's fees fully taxable and nondeductible above-the-line.

Alta Wind I Owner Lessor C, et al. v. United States, Nos. 13-402, 13-917, 13-935, 13-972, 14-47, 14-93, 14-174, 14-175, 17-997 (Fed. Cl. July 8, 2026).

In the complex arena of renewable energy tax planning and compliance, determining the correct tax basis of tangible assets is critical, as it directly governs the availability of depreciation deductions and federal cash grants. The United States Court of Federal Claims, on remand from the Federal Circuit, addressed these core principles in the high-stakes retrial of the Alta Wind Energy Center Section 1603 litigation. This landmark case centers on six wind farm facilities located in the wind-rich Tehachapi Region of California, representing the largest wind energy center in North America. At its core, the dispute highlights a fundamental clash between tax valuation methodologies under Internal Revenue Code (IRC) Section 1060: the taxpayers' reliance on an income-based Discounted Cash Flow (DCF) method versus the government's insistence on a reproduction cost approach.

As CPAs and Enrolled Agents representing sophisticated corporate clients, understanding the court's highly technical findings is essential. This article analyzes the transactional facts, the taxpayers' requests for relief, the statutory framework of the residual method, and the Court of Claims' meticulous parsing of indirect construction costs, turn-key premiums, and developer profit markups under a modified cost approach.

Internal Revenue Service. Summer 2026 Expanded Features for BTA. Fact Sheet FS-2026-11. July 2026. Retrieved from IRS.gov Newsroom.

Internal Revenue Service. Business Tax Account. Official Platform Documentation & Eligibility Guide. Last Updated: July 9, 2026. Retrieved from IRS.gov/Businesses.

The Internal Revenue Service’s continued modernization of its digital infrastructure has fundamentally altered how practitioners manage client accounts, process remittances, and verify compliance. The Business Tax Account (BTA) has transitioned from a limited pilot into a comprehensive, role-based self-service portal. The Summer 2026 fact sheet outlines significant functional expansions that directly impact workflow efficiency, while the underlying access architecture requires careful navigation of eligibility thresholds and authentication protocols. This article distills the latest platform updates, delineates available account modules, outlines the registration and maintenance workflow, and maps entity-specific access parameters for tax professionals advising diverse organizational structures.

Announcement 2026-11, 2026-4 I.R.B. 378, July 10, 2026

The Internal Revenue Service has issued Announcement 2026-11, which serves as a formal modification to the previously issued Notice 2026-10. This announcement specifically targets the "optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes." Furthermore, these rates are utilized for "determining the reimbursed amount of these expenses that is deemed substantiated." The announcement clarifies the updated rates and the specific temporal boundaries for their application to various taxpayer activities.

Chief Counsel Advice Memorandum Number: 202628009, Office of Chief Counsel, Internal Revenue Service (Written: May 29, 2026, Redacted Version Released: July 10, 2026)

The matter discussed in CCA 202628009 concerns a limited partnership governed by a specific Partnership Agreement. Under the terms of this agreement, limited partners are generally shielded from liability for any partnership obligations. However, the agreement addresses the specific scenario of a limited partner possessing a deficit balance in their capital account.

In such instances, the Partnership Agreement grants the general partner the discretion to demand that the limited partner contribute cash to the partnership to restore the deficit balance. If the limited partner fails to comply with such a demand, the general partner maintains the right, though not the obligation, to withhold distributions otherwise payable to the limited partner, up to an amount sufficient to eliminate the deficit balance. The agreement provides no further recourse against the limited partner for a failure to restore the deficit. Notably, the agreement does not impose a requirement upon a limited partner to restore a deficit balance upon the liquidation of the partnership.

Revising Qualified Domestic Trust Regulations under Section 2056A to Update Outdated References and Procedures, T.D. 10050, 2026-13925, 91 FR 13925 (codified at 26 C.F.R. pt. 20) (effective July 10, 2026)

The federal estate tax marital deduction is one of the most critical estate planning tools available to married couples. However, under Internal Revenue Code (Code) Section 2056(d)(1), this deduction is generally disallowed for property passing to a surviving spouse who is not a United States citizen. To bridge this gap, Section 2056(d)(2)(A) provides an exception, allowing the marital deduction if the property passes to the surviving spouse in a Qualified Domestic Trust (QDOT). For decades, practitioners have navigated the strict regulatory requirements of Section 2056A to secure this deduction.

In a significant administrative update, the Department of the Treasury and the Internal Revenue Service (IRS) finalized Treasury Decision 10050 (TD 10050). This decision amends the federal estate tax regulations under Section 2056A to modernize outdated administrative procedures, correct historical drafting oversights, and update organizational references. This article provides tax professionals—including CPAs, Enrolled Agents, and estate attorneys—with a rigorous analysis of these key regulatory updates, the practical rationale behind the changes, comment responses from the preambles, and the critical effective and applicability dates.

National Taxpayer Advocate, "A Long-Awaited Taxpayer Win: The IRS Implements Automatic Penalty Relief," https://www.taxpayeradvocate.irs.gov/news/nta-blog/a-long-awaited-taxpayer-win-the-irs-implements-automatic-penalty-relief/2026/07/ , July 8, 2026

In a recent commentary, the National Taxpayer Advocate (NTA) characterized the Internal Revenue Service's introduction of the Automatic Exemption from Penalty (AEP) program as "a major taxpayer win." For years, the NTA has advocated for a shift from the manual First Time Abate (FTA) process to an automated system to ensure that "relief should not depend on a taxpayer’s income, ability to reach the IRS by phone, or access to professional representation."

The NTA notes that under the legacy FTA system, many eligible taxpayers missed out on relief because they "did not know it was available, did not understand how to request it, could not get through to the IRS, or did not have a tax professional advising them." The transition to AEP addresses these systemic barriers by automatically suppressing penalties for failure-to-file, failure-to-pay, and failure-to-deposit for taxpayers with a clean three-year compliance history. The scale of this change is significant; while manual FTA relief assisted approximately 220,000 taxpayers in fiscal year 2025, the NTA estimates that "if AEP had been in place for the same period, over 1.5 million taxpayers would have received penalty relief – about seven times as many."

Internal Revenue Service, IR-2026-83, July 8, 2026

The Internal Revenue Service is implementing a significant procedural evolution regarding administrative penalty relief. The agency is transitioning from the traditional First Time Abate (FTA) procedure to a new systemic program titled "Automatic Exemption from Penalty" (AEP). This transition is expected to begin in the summer of 2026. Unlike the current FTA method, where "taxpayers must contact the IRS to request relief" via a written statement or Form 843, the AEP is a "systemic administrative relief program" that requires "no taxpayer action." Under the new framework, if a taxpayer is eligible, the IRS will apply the relief automatically upon the completion of the original return's processing and "issue a notice confirming that the relief was granted."

TD 10051, July 9, 2026

The issuance of TD 10051, which finalizes the proposed rules set forth in REG-108761-22, represents a definitive strategic shift in the Internal Revenue Service’s oversight of Charitable Remainder Annuity Trusts (CRATs). This regulation formalizes the "listed transaction" status for specific avoidance schemes utilizing CRATs and Single Premium Immediate Annuities (SPIAs). Crucially, this shift reflects an intentional move away from the use of sub-regulatory "Notices" to identify tax shelters—a method that has recently failed in federal courts—toward formal "Notice-and-Comment" rulemaking. This approach ensures enforcement stability and immunizes the IRS from procedural challenges under the Administrative Procedure Act (APA).

The primary regulatory objectives of TD 10051 for taxpayers and material advisors include:

• Identification of Tax Avoidance: Codifying the specific mechanical steps of CRAT-based avoidance to differentiate them from legitimate § 664 planning.

• Mandatory Disclosure: Requiring participants and material advisors to file comprehensive disclosure statements, facilitating data collection for the Office of Tax Shelter Analysis (OTSA).

• Strict Penalty Enforcement: Establishing a severe penalty framework for non-compliance, including monetary fines and the extension of the statute of limitations.

This regulatory framework addresses both the inherent mechanical tax abuse of these structures and the procedural vulnerabilities previously exposed by tax controversy litigation.

Treasury Decision (TD) 10052, July 9, 2026

Treasury Decision (TD) 10052 has finalized highly anticipated regulations providing crucial guidance on the application of the transfer-for-value rules under Section 101 and the associated information reporting requirements under Section 6050Y. These regulations adopt, with significant practitioner-friendly modifications, the proposed regulations issued under REG-108054-21.

For CPAs and tax professionals managing life insurance transactions, corporate mergers, and client wealth transfers, this Treasury Decision represents a major victory. It successfully dismantles an "inadvertent" tax trap created by the 2019 final regulations that threatened to tax death benefits on ordinary Section 1035 exchanges, while also establishing a de minimis exception for corporate reorganizations.

Thermal Circuits, Inc. v. Commissioner, T.C. Memo. 2026-29 (July 7, 2026)

In the complex intersection of supply chain financing and tax characterization, the distinction between a non-shareholder contribution to capital and compensation for services remains a frequent point of contention. A recent decision by the United States Tax Court in Thermal Circuits, Inc. v. Commissioner provides a critical examination of how manufacturing expansion agreements, specifically those involving leasehold improvements funded by a customer, are treated for federal income tax purposes.

Keysight Technologies, Inc. & Subsidiaries v. United States, No. 25-137 (Fed. Cl. July 2, 2026)

The United States Court of Federal Claims has held that the Department of the Treasury lacked the statutory authority to promulgate Treasury Regulation Section 1.951A-2(c)(5), which sought to deny amortization and depreciation deductions on assets transferred during the "disqualified period". This controversy arose from what the court characterized as the "Treasury’s self-inflicted fix of a mismatch between foreign subsidiaries with fiscal- or calendar-year tax filing requirements that Congress quietly built into the global intangible low-taxed income ('GILTI') statutory scheme".

By granting partial summary judgment to the taxpayer, the court’s decision in Keysight Technologies, Inc. & Subsidiaries v. United States represents a landmark post-Chevron application of the statutory interpretation principles established in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). For tax professionals, including CPAs and EAs, the decision provides a critical blueprint of how federal courts will scrutinize Treasury regulations that seek to rewrite clear statutory provisions under the guise of preventing tax-advantaged transactions.

Wepplo v. Comm'r, Docket No. 36722-21, Order (T.C. July 2, 2026); Wepplo v. Comm'r, Docket No. 36722-21, Motion to Redetermine Interest Pursuant to Rule 261 (T.C. Apr. 10, 2026)

Factual Background and Procedural Posture 

The underlying dispute in Wepplo v. Commissioner originates from a settled deficiency proceeding covering taxable years 2015, 2016, and 2017. Following a trial calendar date in February 2024, the parties reached a settlement, the Court entered a decision on May 12, 2025, and the petitioners subsequently satisfied the assessed deficiencies along with all related interest. Recognizing that the Internal Revenue Code permits post-decision interest disputes under specific conditions, the petitioners filed a motion within the statutory window. As noted in the petition, "Because this motion is being filed within one year of when the Decision became final, this motion is timely under Rule 261(a)(2)." The Court concurred with this jurisdictional threshold, observing that "petitioners paid the tax owed, including all related interest. They then moved, within one year of doing so, for an order under Rule 261 for a redetermination of interest. This appears to establish jurisdiction for a decision on their motion under that Rule and IRC § 7481(c)." The procedural posture thus hinges entirely on whether the Commissioner’s interest computations properly account for statutory postponement periods and standard interest calculation mechanics.

Matter of Edward A. Zelinsky et al. v. Commissioner of Taxation and Finance of the State of New York et al., CV-25-1156 (N.Y. App. Div. 3d Dept. July 2, 2026)

The matter of Edward A. Zelinsky et al. v. Commissioner of Taxation and Finance of the State of New York et al. involves a challenge to the application of New York’s "convenience of the employer" rule during the COVID-19 pandemic. The petitioner, Edward A. Zelinsky, a law professor and attorney employed by Cardozo Law School, is a resident of Connecticut. During the 2019 and 2020 tax years, Zelinsky performed his professional duties both on the New York campus and remotely from his Connecticut home.

In 2020, Zelinsky worked on campus for 24 days between January and March. However, on March 20, 2020, Governor Andrew Cuomo issued Executive Order 202.8, which directed nonessential businesses to "reduce in-person workforce levels by 100% and to implement telecommuting and remote work 'to the maximum extent possible'" (Executive Order [A. Cuomo] No. 202.8 [9 NYCRR 8.202.8]). Consequently, Zelinsky performed the remainder of his duties for the 2020 tax year from his Connecticut residence.

Region IV Mental Health Services v. United States, No. 3:26-CV-12-RPC-JMV, 2026 WL ___ (N.D. Miss. July 1, 2026)

The controversy in Region IV Mental Health Services v. United States centers on the Employee Retention Credit (ERC) provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. 116-136, 134 Stat. 281 (2020). Specifically, the plaintiff, Region IV Mental Health Services (Region IV), sought refundable tax credits for employment taxes for the first, second, and third quarters (Q1, Q2, and Q3) of 2021.

On October 24, 2022, Region IV filed administrative refund claims totaling $5,381,683.35 for these three quarters. On June 5, 2023, the Internal Revenue Service (IRS) issued a refund for Q2 2021 in the amount of $1,990,593.87. However, following a subsequent review, the IRS issued a letter on April 17, 2024, disallowing the ERC refund claims for all three quarters. Region IV protested this disallowance. While the taxpayer claimed the IRS did not directly communicate the final decision, the IRS issued an assessment for Q2 2021 to recover the previously refunded amount. The IRS subsequently provided letters stating the protests were denied and notifying the taxpayer of the right to challenge the determination in a United States District Court or the United States Court of Federal Claims.