The Internal Revenue Service (IRS) has issued significant revisions to the filing exceptions for Schedules K-2 (Partners’ Distributive Share Items—International) and K-3 (Partner’s Share of Income, Deductions, Credits, etc.—International) for both Form 1065 (U.S. Return of Partnership Income) and Form 1120-S (U.S. Income Tax Return for an S Corporation) for tax year 2024. These changes aim to expand the applicability of certain domestic filing exceptions and introduce new small entity exceptions, potentially reducing compliance burdens for many entities. A thorough understanding of these updated requirements is crucial for practitioners navigating the international tax landscape for pass-through entities.

These changes are outlined on the following IRS web pages:

• Form 1065, Schedules K-2 and K-3 filing requirements

• Form 1120-S, Schedules K-2 and K-3 filing requirements

A recent decision from the United States District Court for the District of Arizona in Stenson Tamaddon LLC v. United States Internal Revenue Service, et al. (Case No. CV-24-01123-PHX-SPL) provides critical insights for tax practitioners regarding the Internal Revenue Service’s (IRS) guidance on the Employee Retention Credit (ERC) program. This case addresses a multifaceted challenge to the IRS’s "Notice 2021-20," a 102-page question-and-answer document providing guidance on the ERC. The plaintiff, Stenson Tamaddon LLC (StenTam), a tax advisory firm specializing in ERC claims, contended that this Notice constituted improper legislative rulemaking, bypassing the Administrative Procedure Act’s (APA) notice-and-comment requirements, and was arbitrary, capricious, or beyond the IRS’s statutory authority. The Court, in its ruling on cross-motions for summary judgment, ultimately sided with the government, affirming the IRS’s authority to issue such interpretive guidance without formal rulemaking procedures.

The recent T.C. Memo. 2025-65, Luis Carlos Ibarra Cano v. Commissioner, provides a critical reminder of the Internal Revenue Service’s (IRS) burden in establishing a valid notice of deficiency, particularly when address errors are present. This case highlights the nuanced application of the "last known address" rule and the "harmless error" doctrine.

The recent decision in AbbVie Inc. and Subsidiaries v. Commissioner, 164 T.C. No. 10 (2025), provides critical guidance for tax professionals regarding the application of Internal Revenue Code (I.R.C.) § 1234A, specifically concerning the characterization of termination fees as ordinary deductions or capital losses. This case clarifies the often-debated phrase "right or obligation . . . with respect to property" within § 1234A(1) and its implications for complex corporate transactions.

Tax professionals encounter cases involving collection due process (CDP) and the Internal Revenue Service’s (IRS) determination to uphold collection actions. A recent Tax Court memorandum, Schwartz v. Commissioner, T.C. Memo. 2025-64, provides valuable insights into the criteria the IRS Independent Office of Appeals (Appeals Office) considers when evaluating collection alternatives, particularly installment agreements, and the Tax Court’s standard of review for such determinations. This article will delve into the facts, the taxpayer’s request, the court’s legal analysis, and its application to the specific circumstances, concluding with the implications for tax professionals.

This article addresses the critical updates provided by Notice 2025-33, which significantly impacts digital asset brokers and their compliance obligations under Internal Revenue Code sections 6045, 3406, and related penalty provisions. This notice extends and modifies previously granted transitional relief, offering much-needed breathing room for the evolving digital asset landscape.

The recent Supreme Court decision in Commissioner of Internal Revenue v. Zuch, issued on June 12, 2025, significantly clarifies the jurisdictional limits of the United States Tax Court concerning appeals arising from Collection Due Process (CDP) hearings, particularly when the Internal Revenue Service (IRS) is no longer actively pursuing a levy. This ruling holds substantial implications for CPAs, EAs, and attorneys advising taxpayers navigating IRS collection actions.

As tax professionals, we frequently encounter the intricacies of tax law, particularly when advising clients on refund claims. A recent case, Scott L. Shleifer and Elena Shleifer v. United States of America, heard in the United States District Court for the Southern District of Florida, offers crucial insights into the stringent requirements for substantiating deductions and the critical role of the variance doctrine in tax refund litigation. This article will detail the facts of the case, the taxpayers’ requests for relief, the court’s analysis of the applicable law, and its ultimate conclusions, providing valuable lessons for practitioners.

The United States Tax Court’s recent memorandum opinion in Kramarenko v. Commissioner, T.C. Memo. 2025-61, provides a crucial analysis for tax professionals concerning the interpretation and application of tax treaty provisions, particularly those related to exemptions for students, trainees, and researchers. This case reinforces the distinction between taxable compensation for services and tax-exempt grants, emphasizing the "quid pro quo" doctrine as a cornerstone of the analysis.

As tax professionals, staying abreast of the latest guidance from the Internal Revenue Service (IRS) is paramount to ensuring compliance and providing accurate advice to our clients. Revenue Procedure 2025-23, effective for Forms 3115 filed on or after June 9, 2025, for a year of change ending on or after October 31, 2024, provides a comprehensive list of automatic changes in accounting methods. This Revenue Procedure clarifies and modifies previous guidance, specifically Rev. Proc. 2015-13, 2015-5 I.R.B. 419, and its subsequent modifications. It is an essential resource for taxpayers seeking to change their accounting methods without obtaining advance consent from the Commissioner.

The recent Supreme Court decision in Catholic Charities Bureau, Inc. v. Wisconsin Labor and Industry Review Commission offers critical insights for tax professionals advising religious organizations on unemployment compensation tax exemptions. This ruling underscores the profound interplay between First Amendment principles and state tax laws, particularly when such laws differentiate among religious practices.

The Office of Tax Appeals (OTA) recently issued an opinion in In the Matter of the Appeal of: Q. Tran and R. Medina, OTA Case No. 21088364, addressing critical questions of California residency for the 2007, 2008, and 2009 tax years. This case provides valuable insights into the rigorous standards taxpayers must meet to demonstrate a change in domicile and residency for California tax purposes.

Tax professionals frequently encounter complex scenarios involving intra-entity transfers and debt cancellations. A recent Ninth Circuit decision, Kelly v. Commissioner, No. 23-70040 (9th Cir. 2025), provides critical clarification on the distinct legal standards for claiming a nonbusiness bad-debt deduction under 26 U.S.C. § 166 and recognizing cancellation-of-debt (COD) income under 26 U.S.C. § 61(a)(11) and § 108. This opinion underscores the principle that a debt’s discharge does not automatically render it "wholly worthless" for deduction purposes, rejecting a taxpayer’s attempt to create a simultaneous deduction upon debt cancellation.

As tax professionals, staying abreast of changes in federal payment mechanisms is crucial, especially as the U.S. Department of the Treasury (Treasury) moves towards a fully digitized payment landscape. This article details a significant Request for Information (RFI) issued by the Treasury, inviting public input on the implementation of Executive Order (E.O.) 14247, "Modernizing Payments To and From America’s Bank Account". Understanding this RFI is vital for advising clients, particularly given its direct implications for receiving federal disbursements such as tax refunds.

As tax professionals, understanding the nuances of accuracy-related penalties under Internal Revenue Code (I.R.C.) Section 6662 is paramount. The recent U.S. Tax Court Memorandum Opinion in Ataya v. Commissioner, T.C. Memo. 2025-55, provides a compelling case study illustrating the stringent requirements for taxpayers to demonstrate reasonable cause and good faith, particularly concerning recordkeeping and reliance on tax preparers. This analysis will delve into the factual background, the legal framework applied by the Court, and its ultimate conclusions.

As tax professionals, assisting clients with tax collection issues is a critical part of our practice. A recent Tax Court Memorandum decision, Palli v. Commissioner, T.C. Memo. 2025-54, offers valuable insights into the Internal Revenue Service’s Collection Due Process (CDP) framework, particularly concerning Offers in Compromise (OICs) based on doubt as to collectibility. This case highlights the importance of timely communication, providing comprehensive and updated financial information, and understanding the IRS’s procedural guidelines (including the Internal Revenue Manual (IRM)) as interpreted by the Tax Court.

In a recent Memorandum Opinion, the U.S. Tax Court addressed the valuation of a conservation easement donation by Beaverdam Creek Holdings, LLC ("Beaverdam"). The case, Beaverdam Creek Holdings, LLC v. Commissioner, Docket No. 12362-21, involved a dispute over a noncash charitable contribution deduction claimed for the donation of an easement over 85 acres of property in Oglethorpe County, Georgia. The court’s analysis offers significant insights into valuation methodologies, burden of proof in deduction cases, qualified appraisal requirements, and the application of accuracy-related penalties.

Tax professionals advising corporate clients must grapple with the complexities introduced by the Corporate Alternative Minimum Tax (CAMT), enacted by the Inflation Reduction Act of 2022. The CAMT, imposed under Internal Revenue Code (Code) § 55, applies to "applicable corporations" and is based on their "adjusted financial statement income" (AFSI) for taxable years beginning after December 31, 2022. The determination of "applicable corporation" status and the calculation of AFSI have been areas of significant focus for both taxpayers and the Internal Revenue Service (IRS). Notice 2025-27 provides further interim guidance on these matters, including an optional simplified method for determining applicable corporation status and critical relief from certain additions to tax under § 6655 related to CAMT liability.

As tax professionals, navigating the complexities of international information reporting can be challenging, both for us and our clients. A recent case in the Northern District of California, Jiaxing Huang v. United States of America, Case No. 24-cv-06298-RS, offers insights into how courts are addressing penalties related to foreign gift reporting, specifically Form 3520, and the defenses available to taxpayers. This article provides an overview of the case’s facts, the taxpayer’s claims, and the court’s analysis on the government’s motion to dismiss.

A critical question for tax practitioners advising nonresident clients arises when those clients sell stock in a Massachusetts-based entity they were involved with, particularly if they were also employees. The Massachusetts Appeals Court recently affirmed the Appellate Tax Board’s decision in Craig H. & Natalia I. Welch v. Commissioner of Revenue, concluding that the gain from a founder’s sale of stock in his former employer was Massachusetts source income. The appellants, Craig H. & Natalia I. Welch, are seeking further appellate review from the Supreme Judicial Court of Massachusetts. This case presents a significant issue of first impression impacting countless Massachusetts entrepreneurs and key employees.