In a recent memorandum opinion, Young v. Commissioner, T.C. Memo. 2025-95, the U.S. Tax Court provides a detailed application of the "hobby loss" rules under Internal Revenue Code (IRC) § 183. The case serves as a reminder for tax professionals of the rigorous, fact-intensive analysis required to defend a client’s claimed business losses, particularly when the activity involves elements of personal pleasure or recreation. The court ultimately sided with the Commissioner, disallowing substantial farm losses and upholding accuracy-related penalties against the taxpayers. This article will examine the facts, legal analysis, and key takeaways from the Young decision.

The Treasury Department and the Internal Revenue Service (IRS) have issued a notice of proposed rulemaking (REG-110032-25) providing critical guidance on the new income tax deduction for "qualified tips" under Internal Revenue Code (Code) § 224. This new deduction was enacted as part of the One, Big, Beautiful Bill Act (OBBBA). For tax professionals, understanding the nuances of these proposed regulations is essential for advising clients in tipped occupations. This article provides a technical breakdown of the proposed rules, including the legislative mandate for their issuance, key definitional provisions, the methodology for identifying eligible occupations, and applicability dates.

On September 17, 2025, the House Ways and Means Committee unanimously advanced two bipartisan bills aimed at improving tax administration: the "Fair and Accountable IRS Reviews Act" (H.R. 5346) and the "Tax Court Improvement Act" (H.R. 5349). For tax practitioners, these bills propose significant procedural changes concerning IRS penalty assessments and Tax Court judicial authority. Both bills have garnered support from groups like the National Taxpayers Union and the Small Business & Entrepreneurship Council.

These two tax administration bills have successfully passed the Ways and Means Committee with strong bipartisan support. However, their next challenge is to be scheduled for a vote on the House floor. Despite the committee’s broad approval, there’s no guarantee that House leadership will allocate time in the House’s schedule for these bills to be brought to a vote.

In Blomquist Holdings, LLC, Crestlawn Investors, LLC, Tax Matters Partner v. Commissioner, 165 T.C. No. 6, filed September 17, 2025, the U.S. Tax Court addressed a critical procedural issue under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). The Court held that a nonparticipating partner’s statutory right to participate in a partnership-level proceeding under I.R.C. § 6226(c)(2) is not absolute and is subject to the Tax Court Rules of Practice and Procedure. Specifically, when nonparticipating partners seek to object to a settlement at the eleventh hour, they must make a "substantial showing" under Tax Court Rule 248(b)(4) to be granted leave to participate. The Court’s denial of the partners’ motion in this case provides a valuable lesson on the importance of timely action for partners wishing to protect their rights in TEFRA proceedings.

Tax professionals should be aware that in mid-September 2025, several state revenue departments issued alerts to taxpayers and tax professionals regarding a surge in phishing and "smishing" (text message phishing) scams. Scammers are impersonating state tax agencies through various channels—including text messages, emails, and phone calls—in an attempt to steal sensitive personal and financial information.

The Internal Revenue Service (IRS) periodically releases draft forms to provide taxpayers and practitioners with an early look at potential changes. One such draft, Schedule 1-A (Form 1040), titled "Additional Deductions," has been released for the 2025 tax year, presenting new below-the-line deductions that warrant careful examination.

It is critical to note that this is an early release draft and is explicitly marked "DRAFT—NOT FOR FILING". While significant changes are generally incorporated before final release, unexpected issues or new legislation may lead to further revisions. Professionals can submit comments to the IRS regarding draft forms at IRS.gov/FormsComments, including "NTF" followed by the form number in the message body for proper routing.

This article provides a technical overview of the sections found on the Draft Schedule 1-A (Form 1040) for 2025, detailing the information required for each part and elucidating the placement of these deductions on the new draft Form 1040, specifically highlighting their nature as deductions from Adjusted Gross Income (AGI).

The Department of the Treasury and the Internal Revenue Service have issued final regulations (TD 10033) providing comprehensive guidance for retirement plans regarding catch-up contributions, particularly reflecting statutory changes introduced by the SECURE 2.0 Act of 2022. These regulations primarily focus on the new requirement that certain higher-income participants’ catch-up contributions must be designated Roth contributions, along with adjustments to catch-up contribution limits and operational rules for plan administrators. This article aims to distill the key provisions of these final regulations, highlight significant changes from the proposed regulations, clarify effective and applicability dates, and note other crucial items for tax professionals involved in administering affected retirement plans.

This article provides an analysis of the recent decision by the United States Court of Federal Claims in Roger T. Richter v. The United States, No. 22-1690 (Filed: September 10, 2025), focusing on the determination of "responsible person" and "willfulness" under 26 U.S.C. § 6672, as well as the timeliness of a tax refund claim. This case offers insights for tax professionals grappling with the complexities of trust fund liabilities and procedural requirements in tax litigation.

The recent decision in American Properties, Co. G.P. v. The Welfont Group, LLC, US DC WD TN, Case No. 2:22-cv-0239-SHL-tmp, offers a salient reminder to tax professionals regarding the severe consequences of fraudulent or negligent tax advice and appraisal practices, particularly in the context of charitable contributions. This article provides a technical overview of the case, detailing the factual matrix, the plaintiff’s requested relief, the court’s legal analysis, its application to the facts, and the ultimate conclusions, including the imposition of substantial actual and treble damages.

For taking the clean vehicle credits on a personal income tax returns, an understanding of when a vehicle is considered "placed in service" is paramount—or even how often it may be placed in the service in this case. This concept dictates the timing and eligibility of the credit, as highlighted in the recent United States Tax Court decision, Moon v. Commissioner.

Tax preparers are required to adhere to the Internal Revenue Code and Treasury Regulations, particularly concerning due diligence. A recent case, United States v. Martha A. Velarde, from the United States District Court for the Central District of California, offers a stark reminder of the serious consequences, including civil contempt and financial sanctions, that can arise from persistent non-compliance with court orders and due diligence requirements.  Because, it turns out, the court believes that randomly generating social security numbers to use on tax returns is a failure of a tax preparer to exercise due diligence.

A recent decision from the U.S. District Court for the Eastern District of Pennsylvania, Farber v. Feldman, offers a critical analysis of the requirements for exempting Individual Retirement Accounts (IRAs) from a bankruptcy estate under 11 U.S.C. § 522(d)(12). The case highlights the intersection of bankruptcy law and the Internal Revenue Code (IRC), particularly concerning the consequences of funding an IRA with amounts exceeding the annual contribution limits prescribed by IRC § 219(b)(1)(A). This article examines the court’s detailed analysis and its implications for advising clients on the proper handling of retirement funds, especially those originating from an inheritance.

The California Office of Tax Appeals (OTA) recently released an opinion in In the Matter of the Consolidated Appeals of R. Peters, OTA Case No. 22019564, which provides a valuable analysis of California’s residency and domicile rules. This case is an important read for tax professionals advising high-net-worth individuals with connections to multiple states, especially when one of those states is California. The taxpayer, an entertainer with significant ties to both Nevada and California, challenged the Franchise Tax Board’s (FTB) determination that he was a California resident for the 2012, 2013, and 2014 tax years, which resulted in proposed additional taxes exceeding $2.1 million plus interest.

The U.S. Court of Appeals for the Eighth Circuit has once again vacated and remanded a U.S. Tax Court decision in the long-running transfer pricing dispute between Medtronic, Inc. and the Commissioner of Internal Revenue. This latest opinion, filed September 3, 2025, provides analysis for tax professionals on the application of the best method rule, particularly concerning the Comparable Uncontrolled Transaction (CUT) method, the Comparable Profits Method (CPM), and the use of unspecified methods under Treasury Regulations § 1.482. The case revolves around the appropriate arm’s length royalty rates for intangible property licensed by Medtronic’s U.S. parent to its Puerto Rican manufacturing subsidiary for the 2005 and 2006 tax years.

The IRS has released a preliminary list of tipped occupations as required by the One Big Beautiful Bill.

What is the title and purpose of this document?

The document is titled "Occupations That Customarily and Regularly Received Tips on or Before December 31, 2024". It was released by the Treasury Department (Treasury) and the Internal Revenue Service (IRS) to provide a preliminary list of occupations that qualify for the “no tax on tips” provision of the One, Big, Beautiful Bill Act (OBBB Act). This list is not final; the official proposed list will be published later in the Federal Register for public comment, though the Treasury and IRS expect it to be "substantially the same" as this preliminary version.

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed a Tax Court decision against Buckelew Farm, LLC, upholding a 40% gross valuation misstatement penalty related to a conservation easement donation. The case, Buckelew Farm, LLC v. Commissioner of Internal Revenue, provides insights into the standards for property valuation, the concept of "highest and best use," and the procedural posture of appellate review. The court’s ruling underscores the importance of substantiating valuations with credible market data and illustrates how an independent basis for a lower court’s decision can insulate it from reversal, even if other aspects of its reasoning are challenged.

The United States Court of Appeals for the Federal Circuit issued a significant decision impacting the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1701 et seq. This ruling, in V.O.S. Selections, Inc. v. Trump, clarifies the boundaries of presidential power in economic emergencies, a topic of critical importance for tax professionals. This article will detail the facts, the plaintiffs’ requests, the court’s legal analysis, and its conclusions.

This article examines Private Letter Ruling (PLR) 202535015, which addresses a taxpayer’s request for a waiver of the 60-day rollover requirement for an Individual Retirement Account (IRA) distribution. This ruling provides insight into how the Internal Revenue Service (IRS) applies its discretionary authority in cases involving fraud.

The enactment of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA), has introduced significant changes to the tax treatment of research or experimental (R&E) expenditures. Revenue Procedure (Rev. Proc.) 2025-28 provides crucial administrative guidance and procedures for taxpayers to navigate these amendments, particularly concerning elections and changes in accounting methods. This article will detail the OBBBA changes addressed by this revenue procedure and outline the necessary steps and qualifications for taxpayers.

The United States Tax Court, in James D. Sullivan v. Commissioner of Internal Revenue, T.C. Memo. 2025-92, recently outlined procedural requirements for taxpayers seeking relief from IRS collection actions. This memorandum opinion highlights the importance of timely response to a Notice of Deficiency and the necessity of presenting concrete collection alternatives during a Collection Due Process (CDP) hearing. This case serves as a crucial reminder of the procedural hurdles and the specific legal standards applied by the Court in collection cases.