Parker's Latest Federal Tax Articles:
APRIL 2026
Court Upholds OBBBA's Retroactive Prohibition of ERTC Refunds.
"The court rejected the taxpayer's argument that the retroactive bar was a due process violation, finding that the provision is rationally related to the legitimate legislative purpose of preventing tax fraud."
Final Regs Modify Substantiation Rules for Certain Emergency-Use Vehicles.
"The IRS issued final regulations relating to the definition of qualified nonpersonal use vehicles, which are excepted from the substantiation requirements that apply to certain listed property under Code Sec. 274(d). The final regulations add unmarked vehicles used by firefighters or members of a rescue squad or ambulance crew as a new type of qualified nonpersonal use vehicle."
Refund Lawsuit Precluded Informal Refund Claim.
"The Federal Circuit affirmed the Federal Claims Court and held that Williams failed to satisfy the Code Sec. 7422 requirement that his refund claim be "duly filed with the Secretary." With respect to the claims of tortious and criminal conduct, the Federal Circuit also dismissed those claims for lack of subject-matter jurisdiction."
Sixth Circuit: No Deduction Where Investor Fails to Establish Elements of a Theft Loss.
"The Sixth Circuit affirmed the Tax Court's determination that Shaut was not entitled to any of the claimed deductions. With respect to the deduction for his legal expenses, the court found that Shaut failed to establish his right to those expenses. For starters, the court noted, Shaut's legal invoices pertained to ..."
IRS Extends Temporary Relief for Identifying Digital Asset Units Through 2026.
"The IRS issued a notice extending the temporary relief provided in Notice 2025-7 for an additional year. Specifically, the notice allows eligible taxpayers to use certain alternative methods for making an adequate identification under Reg. Sec. 1.1012-1(j)(3) with respect to units of a digital asset ..."
IRS Provides Procedure for Withdrawing Business Interest Limitation Elections.
"The IRS provided a procedure for withdrawing an election under Code Sec. 163(j)(7)(B) to be an electing real property trade or business, and for withdrawing an election under Code Sec. 163(j)(7)(C) to be an electing farming business, for purposes of the business interest deduction limitation under Code Sec. 163(j)."
District Court Rejects APA Challenge to Final Microcaptive Regulations.
"In a lawsuit brought by a manager of captive insurance companies seeking to set aside the final regulations issued in T.D. 10029 that identify certain micro-captive transactions as listed transactions or transactions of interest, a district court upheld the final regulations under the Administrative Procedure Act and granted summary judgment for the government."
Another Circuit Rejects the Tax Court's Position on Collecting Sec. 6038 Penalties.
"In a case of first impression, the Second Circuit vacated the Tax Court's judgment and held that, when a taxpayer fails to report control of a foreign business, the IRS may collect penalties under Code Sec. 6038(b) through administrative assessment rather than obtaining a judgment in federal district court as the Tax Court had ruled."
MARCH 2026
IRS Proposes to Remove Partnership Related Party Basis Shifting Transaction Regs.
"The IRS issued proposed regulations that would remove the regulations in Reg. Sec. 1.6011-18 that identify certain partnership related-party basis adjustment transactions and substantially similar transactions as transactions of interest, a type of reportable transaction (Basis Shifting TOI Regulations)."
D.C. Circuit Rejects Request to Enjoin IRS Info Sharing Agreement With DHS.
"The D.C. Circuit affirmed a district court and held that community organizations were not entitled to preliminary injunctive relief prohibiting the IRS from sharing taxpayer address information with the Department of Homeland Security for immigration enforcement purposes under an information sharing agreement."
Proposed Regs Provide Guidance on Trump Accounts and Contribution Pilot Program.
"The IRS issued proposed regulations that provide guidance on the general requirements for Trump accounts, certain definitions relating to Trump accounts, making an election to open a Trump account, and rules for who is a responsible party for the initial Trump account once the account has been opened."
IRS Issues Annual Vehicle Depreciation and Lease Inclusion Amounts for 2026.
"The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by Code Sec. 280F(d)(7) and include a $100 increase in the first tax year depreciation limitation deduction for passenger automobiles, to $20,300 from $20,200 in 2025."
Disregarded Entity's Basis in Promissory Notes from Parent Is Zero.
"The Tax Court held that, where a disregarded entity received a promissory note from its owner and then contributed that note to a newly formed partnership in exchange for an interest in that partnership, the note was treated as though it was contributed from the owner directly to the partnership and thus the owner has no basis in the note at the time of contribution."
Court Acquits CPA of Preparing False Tax Returns Claiming AMT Credits.
"The court held that the government failed to present evidence sufficient to sustain a conviction and granted Demba's motion. The court found that the government's entire case rested on Demba's failure to follow the Line 19 instruction and input a number that did not match Line 26 from the prior year. There was no doubt, the court said, that Demba did not follow this instruction ..."
Texas Cattle Ranch Was Operated For Profit Despite Significant Losses.
"The Tax Court held that the deductibility of a cattle ranch owner's farming losses was not limited by Code Sec. 183 because he engaged in the ranch activity for profit. After applying the nine-factor test in Reg. Sec. 1.183-2(b), the court concluded that..."
IRS Was Correct to Use Deficiency Procedures in Collecting Erroneous Refund.
"The Tax Court held that the erroneous portion of a refund that the IRS issued to a taxpayer was a rebate refund, and not a nonrebate refund as argued by the taxpayer, and thus could be collected from the taxpayer through deficiency procedures. The court found that both the IRS and the taxpayer were fundamentally wrong..."
Taxpayers' Software Development and Construction Activities Were Engaged in For Profit.
"The Tax Court held that a married couple's software development activities were engaged in for profit and therefore, Code Sec. 183 did not limit their business expense deductions for that activity."
Second Circuit Affirms Taxpayer's Part Ownership of S Corporation.
"The Second Circuit affirmed the Tax Court and held that a taxpayer who formed an S corporation with her husband, but later stopped receiving distributions from the company after divorcing him, was nevertheless liable for tax on capital gains and rental income realized by the S corporation."
IRS Announces Delayed Applicability Date for Future RMD Final Regulations.
"The IRS announced that it anticipates that certain portions of final regulations relating to required minimum distributions (RMDs) under Code Sec. 401(a)(9) will apply for the distribution calendar year that begins no earlier than 6 months after the date that final regulations are issued in the Federal Register."
FEBRUARY 2026
IRS Provides Interim Guidance on Bonus Depreciation for Qualified Production Property.
"The IRS issued a notice providing interim guidance on the special depreciation allowance for qualified production property under Code Sec. 168(n)... (1) definitions of qualified production property and qualified production activity, (2) how to determine the special depreciation allowance for qualified production property, (3) how and when an election to treat property as qualified production property is made, and (4) how the depreciation recapture rules apply to property that ceases to meet the requirements to be qualified production property."
Legal Representative Is Personally Liable for $1.9 Million of Insolvent Corp's Tax Debt.
"The court entered a judgment against Neuberger in the amount of $1,880,988. With respect to the government's request for a $3,330,664 assessment against Neuberger, the court found the government's assertion that "there is no grey area in this phase of the case" astonishing in light of the fact that the government failed to offer clear legal or evidentiary support for its position. The court also noted..."
Spouse With No Control Over Finances Wins Equitable Relief Under Sec. 6015(f).
"The court found that Dr. Zaheen did not have actual knowledge of the 401(k) withdrawal since she did not learn about the transaction until she received an IRS notice in 2021. However, the court concluded that Dr. Zaheen had reason to know of the withdrawal. The court noted that Dr. Zaheen is a well-educated person who nevertheless signed the joint 2019 return without reviewing it."
Tax Court Chides Attorney for Apparent AI-Generated Case Cites.
"Submitting a brief with fictitious caselaw, the court pointed out, is eligible for sanctions and a clear violation of the Federal Rules of Civil Procedure. However, in a footnote, the court said that it was not absolutely clear that Wagner used generative AI. The court concluded that "a bit of embarrassment" was sufficient for now, but it also noted that courts have begun to more seriously sanction lawyers who use AI as a shortcut in drafting."
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