The Internal Revenue Service recently released Fact Sheet 2025-09 (FS-2025-09), providing updated guidance on the limitation on business interest expense deductions under Internal Revenue Code Section 163(j). This guidance incorporates significant statutory amendments arising from the legislation referred to as the "One, Big, Beautiful Bill" (P.L. 119-21). For tax professionals, these updates necessitate a careful review of adjusted taxable income (ATI) computations, the definition of motor vehicles for floor plan financing, and the interaction between interest limitations and capitalization rules.

This article examines the December 2025 revised questions within the Fact Sheet, correlating the IRS’s administrative positions with the underlying statutory text of Section 163(j). Note that while the prompt requests conclusions from a "court" or "judge," the provided source material consists of administrative guidance and statutory code; therefore, the analysis focuses on the conclusions and determinations issued by the IRS and Congress.

The following are detailed descriptions of the top 10 tax crime cases of 2025 as identified by the IRS Criminal Investigation (IRS-CI) Division. These cases involve a range of financial crimes including pandemic relief fraud, public corruption, cybercrime, and tax evasion.

The recent enactment of the One, Big, Beautiful Bill Act (OBBBA) introduced significant changes to the Internal Revenue Code, specifically regarding the sale of agricultural assets. One of the most critical additions for our clients in the agricultural sector is the new Internal Revenue Code (IRC) Section 1062. This section allows for the deferral of tax liability arising from specific farmland dispositions. However, the interaction between this deferral mechanism and the estimated tax payment requirements under IRC Sections 6654 and 6655 created an immediate technical conflict.

To resolve this, the Internal Revenue Service released Notice 2026-3. This article examines the statutory framework of the Section 1062 election, the estimated tax conflict it created, and the specific relief provided by the Notice.

The Department of the Treasury and the Internal Revenue Service have issued Notice 2026-6, granting additional transition relief regarding the administration of State paid family and medical leave (PFML) programs. This guidance extends the non-enforcement period originally established in Revenue Ruling 2025-4, specifically concerning the taxation and reporting of medical leave benefits attributable to employer contributions.

For practitioners advising state administrators or employers participating in state PFML initiatives, it is critical to distinguish between the relief that has been extended and the specific compliance requirements that will nonetheless take effect in 2026.

A significant development in federal drug policy occurred on December 18, 2025, with the issuance of a new Executive Order prioritizing the rescheduling of marijuana. For CPAs with clients in the state-legal cannabis sector, this action signals a potential and expeditious end to the onerous tax burdens imposed by Internal Revenue Code (IRC) Section 280E.

This article details the new Executive Order, reviews the proposed rule it addresses, and analyzes the technical tax implications regarding Schedule I status and the deductibility of business expenses.

In the recent Tax Court Memorandum decision Fussell v. Commissioner, T.C. Memo. 2025-131, the Tax Court offered a stark reminder regarding the stringent substantiation requirements for business bad debts under Internal Revenue Code (IRC) Section 166 and the mechanical application of Net Operating Loss (NOL) carryovers under Section 172. For tax professionals, this case serves as a critical case study on the distinction between capital contributions and bona fide debt, as well as the burden of proof required to sustain NOL deductions in years subsequent to the alleged loss.

For tax practitioners representing cannabis clients, the intersection of I.R.C. § 280E and collection alternatives has long been a contentious battlefield. On December 16, 2025, the United States Tax Court issued two opinions regarding Mission Organic Center, Inc.—a reviewed opinion covering tax years 2016 through 2020, and a memorandum opinion covering tax year 2021.

These decisions provide critical guidance on how the Internal Revenue Service (IRS) calculates Reasonable Collection Potential (RCP) for marijuana businesses and underscores the procedural requirements Settlement Officers must follow to avoid an abuse of discretion. While the Tax Court upheld the Service’s harsh policy of disregarding § 280E-disallowed expenses when calculating RCP in the reviewed opinion, it simultaneously remanded the 2021 case due to the Appeals Officer’s failure to properly review the administrative record.

In the wake of the Supreme Court’s decision in SEC v. Jarkesy, 144 S. Ct. 2117 (2024), tax practitioners have closely monitored how the judiciary would apply the Seventh Amendment’s jury trial requirement to Internal Revenue Service (IRS) penalty assessments. In Riddle Aggregates, LLC v. Commissioner, 165 T.C. No. 12 (Dec. 15, 2025), the Tax Court addressed this issue head-on regarding accuracy-related penalties asserted in a partnership-level proceeding.

This article details the facts, the constitutional arguments raised by the petitioner, and the Tax Court’s technical analysis rejecting the applicability of the Seventh Amendment to civil tax penalties under I.R.C. § 6662.

For tax professionals representing clients with commingled funds and unfiled returns, the recent Tax Court decision in Chernomordikov v. Commissioner, T.C. Memo. 2025-129, offers a critical examination of the bank deposits method, the substantiation of Cost of Goods Sold (COGS), and the high evidentiary bar required to sustain fraudulent failure to file penalties. While the court sustained the majority of the deficiencies based on the taxpayer’s lack of records, the decision regarding the fraud penalty provides a nuanced look at how the "missing witness" rule applies when a tax preparer fails to testify.

With the enactment of the "One, Big, Beautiful Bill Act" (Public Law 119-21) in July 2025, Congress introduced a new nonrefundable income tax credit under Internal Revenue Code Section 25F. This credit, effective for calendar years beginning in 2027, incentivizes qualified contributions to Scholarship Granting Organizations (SGOs). To facilitate the implementation of this credit, the Internal Revenue Service released Revenue Procedure 2026-6. This article examines the procedural framework established by the IRS, detailing the statutory background, the mechanism for State elections, and the specific requirements for the "Advance Election" process.

On April 1, 2025, the U.S. House of Representatives passed H.R. 1491, known as the "Disaster Related Extension of Deadlines Act". On December 11, 2025 the Senate by unanimous consent approved the House bill without amendment and the bill was transmitted to the President for his signature.

For tax practitioners, this legislation addresses two persistent statutory misalignments regarding federally declared disasters: the interaction between filing postponements and the refund lookback period, and the premature issuance of collection notices. The bill amends the Internal Revenue Code (IRC) to ensure that disaster relief provisions under IRC § 7508A function in parity with standard filing extensions.

The recent Tax Court decision in Mirch v. Commissioner, T.C. Memo. 2025-128, offers a stark reminder to tax professionals regarding the rigorous substantiation standards required for Real Estate Professional Status (REPS) and material participation, as well as the nuances of collection due process (CDP) procedural defenses. The case involves petitioners who were both attorneys, one of whom possessed an LL.M. in taxation and was a Certified Public Accountant. Despite this professional background, the Court upheld the sustaining of a Notice of Federal Tax Lien (NFTL) and rejected the petitioners’ underlying tax positions due to insufficient evidence and aggressive interpretations of passive activity loss rules.

The California Office of Tax Appeals (OTA) recently issued an opinion in In the Matter of the Appeal of Diet Standards LLC (OTA Case No. 230613542), decided on October 7, 2025. This case serves as a critical reminder to tax practitioners regarding the scope of "doing business" in California, particularly concerning out-of-state entities utilizing the Fulfillment by Amazon (FBA) program. The OTA affirmed the Franchise Tax Board’s (FTB) position that physical presence via inventory, regardless of value, satisfies the statutory definition of doing business under Revenue and Taxation Code (R&TC) section 23101(a), independent of the bright-line economic nexus thresholds found in section 23101(b).

The enactment of the One, Big, Beautiful Bill Act (OBBBA), Pub. L. 119-21, on July 4, 2025, introduced significant amendments to Section 223 of the Internal Revenue Code intended to expand the availability of Health Savings Accounts (HSAs). Prior to this legislation, strict definitions regarding High Deductible Health Plans (HDHPs) and disqualifying coverage often prevented taxpayers from utilizing HSAs despite having high out-of-pocket medical costs. The IRS has issued Notice 2026-5 to provide technical guidance on these statutory changes, specifically addressing the permanent expansion of telehealth safe harbors, the inclusion of certain Bronze and Catastrophic plans as HDHPs, and the treatment of Direct Primary Care Service Arrangements (DPCSAs).

Summary of the Final Rule The United States Postal Service (USPS) has adopted a final rule (FR Doc. 2025-20740) adding Section 608.11, "Postmarks and Postal Possession," to the Domestic Mail Manual (DMM). The rule formally defines postmarks and identifies the types of markings that qualify as such. Its primary purpose is to improve public understanding that while a postmark confirms the USPS possessed a mailpiece on the date inscribed, that date does not necessarily align with the date the USPS first accepted possession of the item. The rule clarifies that the USPS does not postmark all mail in the ordinary course of operations and that the absence of a postmark does not imply the USPS did not accept custody.

In the recent decision of Temnorod v. Commissioner, T.C. Memo. 2025-127, the United States Tax Court addressed the tax treatment of payments made by an acquiring entity to settle the liabilities of a related party in bankruptcy. The case serves as a critical reminder to tax professionals regarding the hierarchy of the Internal Revenue Code (the Code)—specifically, that capitalization requirements under section 263 generally supersede deduction provisions under section 162.

In the recent decision of Alioto v. Commissioner, T.C. Memo. 2025-125, the United States Tax Court addressed the consequences of a taxpayer failing to respect the separate existence of his closely held corporation. The Court ruled in favor of the Commissioner regarding deficiencies stemming from unreported wage income, constructive dividends, and capital gains, while simultaneously disallowing personal deductions for corporate business expenses. For tax professionals, this case serves as a stark reminder of the rigorous substantiation requirements for accountable plans and the application of the "duty of consistency" in preventing taxpayers from taking contrary positions to those of their controlled entities.

The Internal Revenue Service has released a draft version of Form 4547, Trump Account Election(s), scheduled for release in December 2025. This form facilitates the election to establish a "Trump Account"—statutorily defined as a type of traditional individual retirement account (IRA) subject to distinct regulatory modifications during a designated "growth period". For tax professionals preparing for the 2025 tax season and beyond, understanding the specific elections, contribution limits, and filing procedures associated with this new instrument is essential.

The Department of the Treasury and the Internal Revenue Service (IRS) have issued Notice 2025-68 to provide preliminary guidance on Section 70204 of the "One, Big, Beautiful Bill Act" (OBBBA), Public Law 119-21. This legislation introduces Section 530A, establishing "Trump accounts," and Section 6434, creating a pilot program for government contributions. The provisions generally apply to taxable years beginning after December 31, 2025.

For tax professionals, this Notice outlines a bifurcated retirement vehicle that operates under unique strictures during a beneficiary’s minority (the "growth period") before converting to standard Traditional IRA rules upon the beneficiary attaining age 18.

The U.S. Tax Court, in Lake Jordan Holdings, LLC v. Commissioner, T.C. Memo. 2025-123, delivered a thorough rejection of an egregious valuation claimed for a syndicated conservation easement, underscoring the necessity of grounding valuations in objective market realities rather than speculative assumptions. This memorandum opinion details the continuation of the "depressingly long line" of cash grabs disguised as charitable contributions. Although the Court ultimately found the basic requirements for claiming a charitable contribution deduction were met, the value claimed was deemed excessive, leading to the imposition of a 40% gross valuation misstatement penalty.