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March 13, 2026
News
The IRS has updated and enhanced the IRS Tax Withholding Estimator to reflect changes to credits and deductions under the One, Big, Beautiful Bill (OBBB), including no tax on tips, no tax on overtime, and other tax benefits. The IRS Tax Withholding Estimator is a free, easy-to-use tool that helps workers and retirees estimate the amount of federal income tax to withhold from their paychecks now for the taxes they will owe next year. In addition to those who want to see how OBBB impacts them, taxpayers who may benefit from using the estimator include those who:
Tip of the Day
IRS Free File . . . It's not for higher income taxpayers or those with a really complex return, but it could be useful for your older children or for employees. There are two options--Free File tax preparation software and Free File Fillable Forms. The adjusted gross income limits on both are $89,000 this year. The first uses 8 tax preparation software firms and includes embedded help. Some firms include free state returns. The second approach is more on your own just entering numbers in fillable forms. Go to IRS Free File for more information and links to the resources.
March 12, 2026
News
When does the statute of limitations run? It can be extended for a number of reasons in addition to the taxpayer's agreement to extend. In Mammoth Cave Property, LLC, Mammoth Cavemanager, LLC, Partnership Representative (166 T.C. No. 4) the the IRS sent the partnership a final partnership adjustment with respect to a charitable contribution deduction. The partnership submitted to respondent Form 8979, Partnership Representative Revocation, Designation, and Resignation, on which it sought to revoke its designation of its partnership representative and to designate another entity as its new partnership representative. The form contained and old address and despite several resubmissions, continued to use the incorrect address. The Court noted To establish the defense of an expired period of limitations, a taxpayer ordinarily must prove that it filed the statutory return and that the statutory period of limitations has expired. Both parties agreed the Form 1065 partnership return was timely filed. The partnership timely petitioned the Court challenging the IRS's Notice of Final Partnership Adjustment (FPA) because of alleged errors in the Notice of Proposed Partnership Adjustment. The partnership contended that because of these errors the period of limitations on making adjustments pursuant to Sec. 6235(a) expired and therefore the FPA was invalid. The Court held the IRS's FPA issued to was timely pursuant to Sec. 6235(a)(2) and is valid.
Tip of the Day
March 15 deadline . . . March 15 is the deadline for filing S corporation and partnership returns, or an extension request, and, if you're doing business as a regular corporation it's the deadline for electing S corporation status for 2026. In many states it's also the time to file special returns for pass-through entities (S corporations and partnerships) including a separate pass-through entity tax. Check the rules for the states you do business in.
March 11, 2026
News
The IRS announced (IR-2026-32) that it is extending weekly office hours at more than 200 Taxpayer Assistance Centers nationwide to provide taxpayers with additional time to receive in-person assistance during the filing season. Extended weekday hours will be available through Thursday, April 30. Taxpayers can check whether a nearby TAC is offering extended hours by visiting IRS.gov to use the TAC Locator tool: Contact your local office. The tool provides office locations, directions, available services, and information about extended hours. In addition to expanded weekday hours, many TACs will also be open on select Saturdays through June 2026 to provide in-person assistance. During these special Saturday hours, taxpayers can access all regularly available TAC services except for making cash payments. For more information about Saturday hours, visit IRS.gov/saturdayhours.
Tip of the Day
Charitable contributions . . . The range is broad, but you can check to see if the charity qualifies by going to the IRS.gov page www.irs.gov/charities-non-profits/tax-exempt-organization-search. Not deductible are gifts to individuals, homeowner's associations, political or lobbying groups, civic leagues and chambers of commerce, and foreign organizations. There's an exception for Canadian, Israeli, and Mexican charities, but they must meet certain criteria. Some foreign charities have a U.S. counterpart for which contributions are deductible.
March 10, 2026
News
The IRS has issued proposed regulations (REG-117270-25) providing general requirements for Trump Accounts, certain definitions relating to Trump Accounts, election rules to open an initial Trump Account by an authorized individual for an eligible individual, and rules for who is the responsible party for the initial Trump Account once the account has been opened. These proposed regulations provide useful information for parents and guardians who may want to elect to open an initial Trump Account, and for prospective trustees of Trump Accounts. The proposed regulations provide that the election to open an initial Trump Account must be made by an authorized individual on Form 4547, Trump Account Election(s) or through the online Form 4547: Trump Account Election Form--IRS Form 4547 in accordance with applicable instructions. An election to open an initial Trump Account must be made on or before Dec. 31 of the calendar year in which the eligible individual attains age 17. The election form also provides an opportunity for the authorized individual to request the $1,000 pilot program contribution from the Secretary for an eligible child (under Section 6434 of the Code). For additional information see IR-2026-33.
Tip of the Day
Canceled debt? . . . If a debt you owe is forgiven, it's generally income. There are some exceptions. If you're a shareholder in a corporation and the corporation forgives a debt youowe it, that's income, but it's considered a constructive dividend. How that's taxed will depend on whether the entity is a C corporation or an S corporation. In the reverse situation, where you cancel a debt the corporation owes you, the canceled debt is considered a contribution to the corporation's capital.
March 9, 2026
News
The IRS issued proposed regulations (REG-117002-25) providing guidance regarding the pilot program for Trump Accounts, which are a new type of individual retirement account for eligible children. Trump Accounts and the Trump Account Pilot Program were established under the One, Big, Beautiful Bill.The proposed regulations issued today provide rules on how the Secretary of the Treasury will make one-time $1,000 pilot program contributions to the Trump Accounts of eligible children for whom elections have been made. The proposed regulations provide guidance regarding the effects of making an election for an eligible child to receive a $1,000 contribution and define other qualifications.
Tip of the Day
Office in the home . . . If you have a sole proprietorship you may be able to take this deduction. The space must used on a regular basis and the use of the space must be exclusively for business. (For more details on what qualifies, see IRS Publication 587.) You can take either a portion (based on square footage) of your home expenses or rent or a "safe harbor" amount of $5 per square foot, but no more than $1,500. Work through the numbers and discuss with your tax advisor before committing because there are some disadvantages.
March 6, 2026
News
The IRS has released the instructions for Form 1041 and Schedules A, B, G, J, and K-1.The IRS issued proposed regulations (REG-105064-25) to make it easier for digital asset brokers to provide statements electronically to customers, rather than sending paper copies. The proposed regulations recognize the inherent electronic nature of digital asset transactions and are intended to reduce burdens on both brokers and their customers. The proposed regulations would give brokers an alternative, optional process for obtaining consent from their customers to receive 1099-DA statements electronically without having to offer them the choice of receiving the 1099-DA statements on paper. Under this process, brokers would also not have to provide customers with the ability to withdraw a previously provided consent to receiving the 1099-DA statements in an electronic format.
Tip of the Day
Help your tax preparer . . . More than a few taxpayers go to their tax preparer with a pile of unorganized papers and then complain about the bill. Many preparers base their fees on a formula (e.g., a certain amount per rental property, per form, etc.) but don't ignore the time involved. Most preparers who have been doing taxes for a while realize many individuals don't understand all the paperwork they receive, but virtually anyone can put the material in some order. Here are some tips.
March 5, 2026
News
The IRS has announced The Information Returns Intake System (IRIS) is available for the electronic filing of Tax Year (TY) 2025 Forms 1042-S by eligible U.S. filers. Forms 1042-S for prior tax years, as well as submissions by foreign filers, must continue to be electronically filed using the Filing Information Returns Electronically (FIRE) system until it is retired. During the transition period, IRIS and FIRE will both be available and operate in parallel. Beginning with Filing Season 2027 (TY 2026 Forms 1042-S), IRIS will be the only system available for electronically filing information returns. The IRS is reminding filers they are encouraged to review IRIS requirements and begin preparing for the transition. Click on the link above for links to other IRS resources with respect to Form 1042-S.
Tip of the Day
Gift tax filing? . . . The annual gift exclusion for 2025 was $19,000. If you made a gift that exceeded that amount you must file a return. Unless you exceeded the unified estate and gift tax exemption amount no tax is due, but the excess will reduce your unified exemption amount. If you have to file the gift tax return is due April 15 and there's an automatic extension if you file an extension request for your individual tax return.
March 4, 2026
News
The IRS has released Revenue Procedure 2026-15 which provides (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year 2026; and (2) a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2026. These tables reflect the automobile price inflation adjustments required by Sec. 280F(d)(7) of the Code. For purposes of this revenue procedure, the term "passenger automobiles" includes trucks and vans.Tip of the Day
Conservation easements . . . If you are an ultimate member of a partnership or an S corporation, and the amount of the partnership or S corporation's qualified conservation contribution exceeds 2.5 times the sum of each ultimate member's relevant basis, then the contribution is not treated as a qualified conservation contribution. Unless the conservation contribution meets an exception, it will be disallowed.
March 3, 2026
News
The IRS has released IR-2026-28 which describes Schedule 1-A, the form you use to calculate the auto loan interest deduction, the no tax on tips and no tax on overtime as well as the $6,000 deduction for seniors. The news release provides an introduction to the new Schedule. Instructions can be found in the general instruction package for the Form 1040.
Tip of the Day
Medical expenses . . . They're deductible but you've got to break a 7.5% of adjusted gross income threshold. Many taxpayers forget to count dental work, weight loss program as treatment for a specific disease diagnosed by a doctor, medical aids such as eyeglasses, contact lenses, braces, crutches, compression stockings (if prescribed by a doctor), and even a guide or service dog and the cost to maintain them. Also included is nursing help at home. But if you paid an aide for both nursing and housework, only the cost of the nursing help is deductible. If you're using computer software, there's almost assuredly a worksheet that will help. Unless you're clearly under the threshold, put in all the numbers and let the program do the work.
March 2, 2026
News
In most situations the IRS is presumed to be correct and the taxpayer can rebut it in court. However, in the case of fraud, the IRS must establish that by clear and convincing evidence. In Joseph R. Gottesman (T.C. Memo. 2025-94) the IRS claimed the taxpayer failed to report all his income. The tax deficiencies for the four years at issue ranged from a high of $116,840 to a low of $45,452. The Court noted the IRS may rely on a third-party income report if the taxpayer does not raise a reasonable dispute about its accuracy. The taxpayer has neither claimed, nor introduced credible evidence sufficient to show, that the IRS's determinations were arbitrary or erroneous with respect to his unreported income. In addition, the evidence that a Motion for Summary Judgment is factually supported and that there is no genuine dispute as to any material fact. The Court examined 11 badges of fraud and sustained the IRS's finding of civil fraud.
Tip of the Day
Long-term care premiums . . . You can deduct these as medical expenses, but the amount is limited based on your age. If you're 40 or under, the maximum deduction is $480; if you're 71 or older the maximum is $6,020.
February 27, 2026
News
The IRS announced (IR-2026-26) the launch of a new web page that allows taxpayers to confidentially report suspected tax fraud, scams, evasion, or other tax-related illegal activities, as well as internal-facing improvements that will enhance how referrals are used to stop illegal activity. The new web page consolidates multiple IRS fraud-reporting options into a single, centralized location, making it easier for taxpayers to report suspicious activity. The web page can be found by selecting the new "Report Fraud" button on the IRS.gov homepage or at IRS.gov/SubmitATip. Taxpayers are encouraged to report suspected tax-related wrongdoing as soon as possible to help the IRS address fraud and noncompliance.
Tip of the Day
More scams . . . Two scams we've been noticing. The first is an old one but now on the internet. Loans for small businesses. Small businesses are ripe for the scam since they can almost always use more capital, it's often difficult to get, and they don't know where to go. Before pursuing any loan offer talk to your accountant, financial advisor or a trusted colleague. And get good legal advice before you commit to anything. The second one is a "your service will terminate immediately". It could be for space on the cloud, a warranty on equipment, support for a product, antivirus protection, etc. Even if the dollar amount is small, check it out before giving your credit card or bank account out. In most cases the scammers are guessing you have the service or product and are just hoping you'll bite. Their scoring percentage can be very low because their costs are low.
February 26, 2026
News
Filing a frivolous return or a zero-income return where you had income, isn't a smart move. The IRS can spot the return easily and you'll get hit with penalties that can range from a late filing penalty and, in the case of more than one such return a frivolous position penalty. That was the case in Jack Donald Supinger (T.C. Memo. 2025-93). The taxpayer filed a zero return and failed to report wage income. He received a W-2 for $102,533 but had no income tax withholding. He claimed a refund of $7,844, the total of his Social Security and Medicare taxes withheld. The Court noted the return failed the "Beard" test which consists of four parts--(1) there must be sufficient data to calculate tax liability; (2) the document must purport to be a return; (3) there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and (4) the taxpayer must execute the return under penalties of perjury. Because the return failed the first and third tests the Court disallowed the IRS's accuracy-related penalty but sustained the failure to file penalty since a valid return was not filed. The Court also imposed a $10,000 penalty for delaying collection of the tax.
Tip of the Day
Home sale exclusion . . . You have to own and use the house as your principal residence for two years to secure the $250,000 ($500,000 married filing joint) exclusion. Most of the time the beginning of the use period is clear. Fred and Sue pack the van, leave their old residence they just closed on, and move into the new house. But there can be a delay. Sue wants the kitchen and baths redone; Fred wants the basement changed into a workshop. They don't move into the home until 3 months after closing on it. If there can be any question, the IRS may look at other factors such as did you change your address to the new home? Did you change your driver's license, voting address, mail delivery, car registration, address for professional licenses, etc. If the move is to another state they may look at switching doctors, recreational clubs, etc. Keep good documentation to support your claim.
February 25, 2026
News
Between 1999 and 2002, the petitioners (The Diversified Group Incorporated; James Haber 166 T.C. No. 2) marketed and sold certain tax avoidance strategies to clients without reporting those strategies as required by Sec. 6111. The IRS assessed penalties under Sec. 6707 with respect to the petitioners. In correspondence with them, the IRS offered a meeting with IRS Appeals to dispute their liabilities for the assessed penalties. To circumvent the application of Sec. 6330(c)(2)(B) and associated regulations, which prohibit taxpayers that have had an "opportunity to dispute" their underlying tax liability from challenging that liability in a collection due process (CDP) proceeding, the petitioners refused to meet with IRS Appeals. The IRS took actions to collect the penalties, and the petitioners requested CDP hearings. At their respective CDP hearings, they argued that they were entitled to challenge their liabilities for the assessed penalties. The IRS issued Notices of Determination, determining that the petitioners were precluded from challenging their penalty liabilities. They sought review in the Tax Court. In a Motion for Partial Summary Judgment the IRS addressef four issues: (1) whether the petitionersd were precluded from challenging their penalty liabilities during their respective CDP hearings; (2) whether the settlement officer who conducted their CDP hearings was properly appointed under the Appointments Clause of the Constitution; (3) whether a postexamination hearing with IRS Appeals would have violated the petitioners' Fifth Amendment due process rights; and (4) whether the penalties assessed with respect to the petitioners violated the Excessive Fines Clause of the Eighth Amendment. The Court held the IRS's offer of a conference with IRS Appeals was an opportunity for the petitioners to dispute their penalty liabilities within the meaning of Sec. 6330(c)(2)(B) and because of that prior opportunity, the petitioners were precluded under Sec. 6330(c)(2)(B) from challenging their liabilities in their CDP hearings and precluded from doing the same in the Tax Court. In addition the Court held the petitioners did not clearly raise a Fifth Amendment due process challenge to any hypothetical conference with IRS Appeals, and a ruling on that issue was unnecessary. Finally, the petitioners' Eighth Amendment arguments concern their underlying liability for the assessed penalties and, because the petitioners are precluded from challenging their penalty liabilities, they cannot challenge the penalties on Eighth Amendment grounds.
February 24, 2026
News
Announcement 2026-7 provides that the Internal Revenue Service (IRS) anticipate that certain portions of final regulations relating to required minimum distributions (RMDs) under Section 401(a)(9) of the Code 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.
Tip of the Day
IRS Publication . . . Publication 17 provides substantial guidance for doing your 2025 return. If you've got a tax question while preparing your return the first place to go is the instructions for the form or schedule; the second place is generally Publication 17. For more in-depth information, the IRS publications on specific topics (e.g., Publication 503, Child and Dependent Care Expenses) are the next source.
February 23, 2026
News
Notice 2026-16 announces the IRS will issue proposed regulations on a new provision of the law allowing taxpayers to elect to take a depreciation deduction up to 100% of the unadjusted depreciable basis of any qualified production property placed in service during a taxable year. Qualified production property is, generally, nonresidential real property used by a taxpayer as an integral part of a qualified production activity. A qualified production activity is a manufacturing, chemical production, agricultural production, or refining activity that results in the substantial transformation of the property comprising a qualified product. In addition to other requirements, the special depreciation allowance only applies to qualified production property placed in service after July 4, 2025, and before Jan. 1, 2031. The notice provides interim guidance regarding the following: definitions of qualified production property and qualified production activity, how to determine the special depreciation allowance for qualified production property, and how and when an election to treat property as qualified production property is made. The notice also explains how the depreciation recapture rules apply to property that ceases to meet the requirements to be qualified production property.
Tip of the Day
Exclusion for medical expenses . . . You don't have to include in income amounts reimbursed for medical expenses unless you took a deduction in an earlier year. For example in 2024 you deducted a $3,500 payment to a doctor because your insurance denied that part of the claim. In 2025 the decision by the insurance company was reversed and you received $3,500.
February 20, 2026
News
If you've received a statutory Notice of Deficiency you generally can't contest your liability at a collection due process hearing. That was the case in James D. Sullivan (T.C. Memo. 2025-92) and the Court found he could not challenge his liability. In addition, the Court reviewed the procedures of the settlement officer (SO) and found the taxpayer did not submit all requested financial information and submitted no proposal for an installment agreement or other collection [ alternative, and the Court noted it has consistently held that it is not an abuse of discretion for an SO to reject collection alternatives and sustain a proposed collection action where the taxpayer has failed to put a specific offer on the table. The Court also noted the taxpayer failed to properly challenge the SO's consideration of "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary."
Tip of the Day
Don't rush to file . . . While many taxpayers should be set to file, if you've got a more complicated return with one or more brokerage statements, K-1s from a partnership, LLC, S corporation or trust, you might want to hold off. Financial institutions have extra time to file and frequently have corrected statements.
February 19, 2026
News
Filing a joint return with your spouse means each of you is equally and severally liable for the tax liability. But if your spouse was responsible for the underpayment (e.g., it was his or her income) you may be able to avoid the liability under the innocent spouse rules. But it's far from automatic. You've got to meet a number of criteria. In Lisa Marie Walsh (T.C. Memo. 2025-91) the Court sided with the IRS in denying relief. The Court noted Rev. Proc. 2013-34 sets forth siven nonexclusive factors--(1) the taxpayer's marital status, (2) whether the requesting spouse will suffer economic hardship absent relief, (3) whether the requesting spouse had knowledge or reason to know that the nonrequesting spouse would not or could not pay the income tax liabilities, (4) whether either spouse had a legal obligation to pay the liabilities, (5) whether the requesting spouse significantly benefited from the underpayments, (6) whether the requesting spouse has complied with income tax laws in the years following those to which the request for relief relates, and (7) the mental or physical health of the requesting spouse. The IRS argued the factors for knowledge or reason to know that the nonrequesting spouse would not or could not pay the income tax liabilities, significant benefit, and compliance with tax laws weigh against relief (there was a history of the spouse deceiving and hiding money from the IRS and personal expenses were paid by the business. Three factors were neutral and one, marital status, weighed for the taxpayer.
Tip of the Day
IRS online help . . . IRS staffing is down and getting "in person" help on the phone may be difficult but there's plenty of online help. Many common tax questions and tasks can be handled online before, during, and after filing through IRS self-service tools available 24/7. The IRS offers step-by-step tax filing guidance and self-service assistance to help taxpayers before, during, and after filing their returns. You can also go to Let Us Help You for other questions. The Interactive Tax Assistant is another useful tool. And, if all else fails, read the instructions--Publication 17 is a good overall primer. But the instructions to the Forms and Schedules may answer most of your questions. The IRS has a long list of publications that are also a big help. They're generally easy to understand and are an excellent source. Check our home page for links to Forms and Publications.
February 18, 2026
News
The IRS has announced (Rev. Rul.2026-6) interest rates will decline by one percentage point for the calendar quarter beginning April. 1, 2026. For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily. The rates are as follows:
Note that the interest rates on over-and underpayments are based on the yields of marketable obligations of the U.S. These rates are only indirectly affected by the Federal Reserve rates. Moreover, the yields are rounded. As a result these rates don't change in lock step with actions by the Federal Reserve.
Tip of the Day
State returns . . . If you're doing your own return and using tax preparation software, you should be aware that most items carry automatically to your state return. That's one of the advantages of computers. But, depending on the state, the software is unlikely to handle all the special items. Some require an entry on the state return. That's especially true for nonresident and part-year resident returns. Check the instructions for any lines that require a special entry. The special treatment varies by state. New York has an unusual number of modifications--both positive and negative, Maryland, far less. And keep in mind that almost every state with an income tax has special credits and deductions.
February 17, 2026
News
The IRS announced (LA-2026-01) tax relief for individuals and businesses in the State of Louisiana affected by severe winter ice storms that began on Jan. 22, 2026. These taxpayers now have until March 31, 2026, to file various federal individual and business tax returns and make tax payments. Following the disaster declaration issued by the State of Louisiana, individuals and households that reside or have a business in the State of Louisiana qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, for certain deadlines falling on or after Jan. 22, 2026, and on or before March 31, 2026, taxpayers are granted additional time to file. As a result, affected individuals and businesses will have until March 31, 2026, to file returns and pay any taxes that were originally due during this period. The March 31, 2026, deadline applies to individual income tax returns and payments normally due on or after Jan. 22, 2026. Penalties on payroll and excise tax deposits due on or after Jan. 22, 2026, and before Feb. 6, 2026, will be abated as long as the tax deposits are made by Feb. 6, 2026.
Tip of the Day
Nontaxable distributions . . . C corporations, S corporations, and partnerships can throw off nontaxable distributions. How that can occur is different for each entity. In the case of entities held in your mutual fund the nontaxable amount will appear on your Form 1099-DIV. You'll have to reduce the basis in that holding by the amount of the distribution so when you sell the investment you'll report a higher capital gain or smaller loss.
February 13, 2026
News
?You can appeal a Tax Court decision to the U.S. Court of Appeals. That's what the taxpayer did in Karen Veeraswamy, Petitioner-Appellant (U.S. Court of Appeals, Second Circuit). In the earlier case (T.C. Memo. 2024-83) the taxpayer argued that she had abandoned her half interest in the S corporation she owned with her husband and should not have to report any income from the corporation. The Appeals Court noted that evidence before the Tax Court established that she remained a part owner of the S corporation in years prior to 2014. The minutes of the corporation's first board meeting demonstrated that her husband and her each had 50 percent ownership of in 2000. Moreover, she testified at trial that she participated in management of the enterprise after the couple began living separately in 2004. In addition, the corporation's Forms 1120S and Schedules K-1, which she submitted in her husband's personal bankruptcy, showed that she remained a half-owner of the corporation as of 2010. She did not demonstrate that she abandoned her interest prior to 2014, and she submitted no evidence of such abandonment in proceedings before the Tax Court. Indeed, her own admissions supported the Tax Court's conclusion that she was part owner of the corporation through at least 2014. In particular, in 2019, responding to the trustee's attempt to obtain turnover of the escrow funds in her ex-husband's bankruptcy, Veeraswamy repeatedly asserted that she was 50 percent equity shareholder of the corporation. The Court found that the Tax Court did not err in finding her a part owner of the corporation for the time at issue.
Tip of the Day
Using computer software to prepare your return? . . . If you prepare your return using tax software you may have to file the return electronically. That's what some states require. Check the rules for your state. Another point. It's often far easier to "plug" an entry rather than entering a number on a lower-level worksheet and having the software compute the entry on the form. But entering the info on the worksheet may add vital information that could be used in other ways such as computing any limitations or entering the number correctly on a state return. In more than a few cases it can generate an error message that will prevent you from filing electronically.
February 12, 2026
News
Make sure you're able to take your case to court. In Veleta Williams (T.C. Memo. 2025-90) the taxlpayer received an IRS Notice CP71A, Annual Reminder of Balance Due Taxes for Tax Year 2006, dated October 23, 2023, informing her of a balance due for her 2006 taxable year. On January 8, 2024, she filed her Petition in this case, attaching only the Notice CP71A, which is not a Notice of Deficiency. Respondent states that he has mailed no Notice of Deficiency and made no other determination that might confer jurisdiction on the Court. Because the taxpayer failed to establish the Court's jurisdiction, the Court granted the IRS's Motion to Dismiss and dismiss this case for lack of jurisdiction.
Tip of the Day
More than one sole proprietorship? . . . If you operate more than one sole proprietorship, you've got to file separate Schedule C's for each one. That's not always easy to ascertain. If you're operating an auto body shop out of the same location as your auto repair and the operations and recordkeeping are integrated, that's probably a single business. But if you have an auto repair business and also own a hardware store, you should be filing two Schedule C's.
February 11, 2026
News
Revenue Procedure 2026-12 updates Rev. Proc. 2024-44 and 2024-52, and identifies circumstances under which the disclosure on a taxpayer's income tax return with respect to an item or position is adequate for the purpose of reducing the understatement of income tax under Section 6662(d) of the Code (relating to the substantial understatement aspect of the accuracy-related penalty), and for the purpose of avoiding the tax return preparer penalty under section 6694(a) (relating to understatements due to unreasonable positions) with respect to income tax returns.
Tip of the Day
Nondeductible losses . . . You can generally deduct losses on the sale of stock or other investment property. Losses on the sale of most business assets (e.g., machinery, trucks) can also be deducted. But there are restrictions. You can't deduct losses on sales to related parties. Related parties include members of a family, a corporation and an individual who directly (or indirectly) owns more than 50% of the corporation's stock, a fiduciary and a beneficiary of the same trust, and an executor of an estate and a beneficiary of that estate unless the sale was to satisfy a pecuniary bequest.
February 10, 2026
News
The IRS announced (IR-2026-22) a new expansion of Tax Pro Account, introducing business-level digital capabilities for tax professionals who work in tax-preparation companies, accounting firms, or other organizations. The latest enhancements give tax-professional businesses greater visibility and control over their Centralized Authorization File relationship, helping organizations that serve larger numbers of taxpayers manage authorizations more efficiently while reducing paper-based processes. These updates establish the digital foundation for future expansions supporting tax professionals. Sole proprietorships and other businesses that do not use CAF systems are not impacted by this change. This release allows designated business representatives to:
Tip of the Day
Bought bonds at a discount? . . . In general, a capital gain from the disposition of a market discount bond is treated as interest income to the extent of accrued market discount as of the date of disposition. You can find more information in the instructions to Form 8949 and in IRS Publication 550.
February 9, 2026
News
You can get relief from the IRS for unpaid tax obligations, but you've got to work with them. In John J. Mongogna and Michelle L. Mongogna (T.C. Memo. 2025-89) the taxpayers had filed a voluntary petition for bankruptcy. The taxpayers claimed several items of exempt property including their current residence. The IRS has filed a notice of federal tax liens (NFTL) for the years 2008 through 2015. During the CDP hearing, the taxpayers contended that their federal tax debts for tax years 2008 through 2015 were discharged during the bankruptcy action. The IRS concluded that tax years 2008 through 2015 were dischargeable; but because a properly recorded lien existed on the property before the filing of the bankruptcy action, the IRS could pursue collection against any exempt or abandoned assets. To evaluate whether collection against any exempt or abandoned property was warranted and what collection alternatives the taxpayers might have available to them, the IRS requested certain information from petitioners: (1) a completed Form 433–A (financial information) and (2) two denials for loans showing that the equity in the assets could not be reached or borrowed against. The taxpayers did not supply the requested information despite numerous requests to do so. The Court found the settlement officer correctly determined that the 2008 through 2015 tax liabilities could be collected against the taxpayers' exempt property despite liabilities that may have been discharged personally. She determined that petitioners needed to show the IRS their inability to reach equity in the assets before the IRS bankruptcy specialist could conclude her review of the case. Having correctly applied bankruptcy law, the settlement officer did not abuse her discretion in sustaining the proposed levy action.
Tip of the Day
Change your name? . . . Your name and social security number on your tax return have to match. If you change your name because of marriage, divorce should report the name change to the Social Security Administration (SSA). And don't forget to notify the SSA if your child's last name changes.
February 6, 2026
News
In a start-up business (and on-going entities) it's not unusual for an officer, employee, or outside contractor to receive shares or an interest in the company for services performed. If the interests are fully transferrable, that is, there is no risk of forfeiture, the fair market value is income when received and the basis of the property to the recipient is the fair market value at time of transfer. In Corri A. Feige (T.C. Memo. 2025-88) the taxpayer claimed the shares received had a substantial risk of forfeiture. The Court noted Whether a risk of forfeiture is substantial depends on the facts and circumstances. A substantial risk of forfeiture exists only if rights in property that are transferred are conditioned, directly or indirectly, upon the future performance (or refraining from performance) of substantial services by any person, or upon the occurrence of a condition related to a purpose of the transfer if the possibility of forfeiture is substantial. The Court found the shares were not subject to a substantial risk of forfeiture and were fully transferable and that they had to be included in income in the year received.
February 5, 2026
News
Substantiation is the key. The IRS can disallow virtually any deduction without substantiation. The amount of documentation varies but is particularly stringent for charitable contributions. In Dax Xavier Johnson (T.C. Memo. 2025-87) the taxpayer claimed a substantial charitable contribution to a charitable organization on which the taxpayer was a board member. The organization's mission was to find the killer of the taxpayer's nephew. The Court noted to verify a charitable contribution of money, the regulations require the taxpayer to maintain one of the following for each contribution: (1) a canceled check; (2) a receipt from the donee; or (3) in the absence of a check or receipt, other reliable written records. A receipt or record used for this purpose must show the name of the donee, the date of the contribution, and the amount of the contribution. For all contributions over $250, Section 170(f)(8) requires a contemporaneous written acknowledgment from the donee organization that specifies the amount of cash and whether any goods or services were provided in return. Section 170(f)(17) further directs that no deduction is allowed for any cash contribution "unless the donor maintains as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution." A donee organization's written communication that complies with section 170(f)(17), however, does not irrefutably prove the fact and deductibility of the donation it attests.The Court was skeptical of the veracity of the deduction because the taxpayer was a board member. The Court was skeptical in part because of an overstatement of deductions on other parts of the return and that the letter was the only substantiation of the dollar amount. In addition, the taxpayer presented no bank records to support the amount. The Court sustained the disallowance of the deduction.
Tip of the Day
Changes to the child tax credit . . . In addition to the increase, beginning in 2025, to be eligible to claim the CTC or ACTC, you must have a valid SSN, which means it must be valid for employment and issued before the due date of your return (including extensions). If you are filing a joint return, only one spouse is required to have a valid SSN in order to be eligible for the CTC and ACTC. The other spouse must have either an SSN or ITIN, and it must have been issued on or before the due date of the eturn (including extensions).
February 4, 2026
News
The IRS announced (MT-2025-02) tax relief for individuals and businesses in the State of Montana affected by severe storms and flooding that began on Dec. 10, 2025. These taxpayers now have until May 1, 2026, to file various federal individual and business tax returns and make tax payments. Following the disaster declaration issued by the FEMA, individuals and households that reside or have a business in the Blackfeet Indian Reservation, Lincoln, and Sanders counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Dec. 10, 2025, and before May 1, 2026, are granted additional time to file. As a result, affected individuals and businesses will have until May 1, 2026, to file returns and pay any taxes that were originally due during this period. For more information, click on the link above.
Tip of the Day
Research and experimental expenditures . . . Beginning in 2025 businesses can deduct domestic R&D expenditures or you can elect to capitalize them and deduct them ratably over a period of 60 months or more starting in the month you realize benefits from such expenditures. The choice can have a substantial impact on your tax planning.
February 3, 2026
News
If you can't pay your assessed tax liability at once, the IRS has options. In Christopher B. Epps (T.C. Memo. 2025-85) the taxpayer owed some $159,000 and requested a CDP hearing at which he (1) indicated that he could not pay the balance, (2) requested penalty abatement, and (3) expressed interest in both an installment agreement and an offer-in-compromise. The taxpayer's lawyer participated in a telephone hearing and stated his client (who was incarcerated at the time) was unable to pay. The lawyer provided financial information showing $33,300 in bank accounts, investments of $182,176, and equity in real property of $236,995, as well as additional equity in vehicles, and an open line of credit. The Appeals officer concluded that the taxpayer could fully pay his 2014 liability, applying his equity and future income and accordingly informed the lawyer that he was not eligible for currently-not-collectible status. The Appeals Office issued a notice of determination, sustaining the proposed levy action and denying currently-not-collectible status. The notice of determination rested this conclusion on the financial information the taxpayer himself supplied. In particular, the Appeals officer pointed to the twin facts that (1) although incarcerated, the taxpayer still received pension income and had] the ability to pay, and (2) he had sufficient funds and equity in assets to pay towards the debt. The Court found no abuse of discretion on the part of the IRS.
Tip of the Day
Contributions to a governmental paid family leave program . . . Beginning in 2025, if you made contributions to a governmental paid family leave program, you will now include the full amount of those contributions in your income. If you itemize your deductions on Schedule A, you can include the amounts contributed as part of the state and local taxes you paid.
February 2, 2026
News
National Taxpayer Advocate Erin M. Collins released her 2025 Annual Report to Congress, finding that taxpayers generally fared well in their dealings with the IRS in 2025 and that most taxpayers are likely to have a smooth experience in 2026. However, the report cautions the upcoming filing season is likely to present greater challenges for taxpayers who encounter problems. “Among the reasons the 2025 filing season went well was that the IRS had its largest workforce in many years and faced no major tax law changes that required implementation during the filing season,” Collins writes. “Entering 2026, the landscape is markedly different. The IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of extensive and complex tax law changes mandated by the [One, Big, Beautiful Bill] Act, many of which apply retroactively and require significant IRS programming, guidance, changes to tax forms and instructions, and taxpayer education.” The report noted that overall staffing is down 27%, but not across the board. The Small Business/Self-Employed area is down 38% and Taxpayer Services, the largest by staff, is down 21%. For more information and links to other resources, see IR-2026-15.
Tip of the Day
Interest on home under construction . . . You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the day construction begins.
January 30, 2026
News
You can file an amended return if you've made an error on a filed return, and you may have options for in paying the amount on the return. But in the case of Tisha S. Hillman (T.C. Memo. 2025-84) the taxpayer filed returns but failed to pay the full amount of the liabilities. The IRS sent the taxpayer a Notice of Intent to Levy and informing the taxpayer of the amount that she owed with interest and penalties, and had until May 27, 2023, to request a CDP hearing. On May 2, 2023, an IRS employee prepared and signed the NFTL (Notice of Federal Tax Lien) for the years at issue. On May 11, 2023, the IRS issued petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing (Lien Notice), notifying her of the filing of the NFTL. The taxpayer timely mailed a request for a CDP hearing. She stated that she was not liable for the tax the IRS was trying to collect and requested that the NFTL be withdrawn. Importantly,she did not check the box requesting a hearing regarding the Levy Notice. On June 13 and 14, 2023, the IRS processed levies on the taxpayer's assets. She subsequently raised the issue of these levies with the IRS, at which time she was informed that she could have an equivalent hearing for the levies but that the time for a CDP hearing on the levies had run out. After a number of months, the levies were lifted. In a collection hearing she requested payment alternatives and filed the requested financial information. She did not accept either of the IRS's alternative installment agreements and challenged her underlying tax liabilities, but a notice explained that such liabilities reflected amounts listed on tax returns she herself had filed. The Notice further noted that petitioner had been provided with an opportunity to file amended returns to correct the liabilities but had not done so. The Court found that respondent did not abuse his discretion in sustaining the collection action.
Tip of the Day
Scan those receipts . . . As you're going through your receipts for your tax prep consider scanning or copying them. Most stores now print receipts on heat sensititve paper. The big advantage for them is no ribbon or other source of ink to replace. The downside for the customer is that receipt will become unreadable over time. How long? Depends on several factors, but the paper is very heat sensitive. At room temperature they can become worthless after a year or two. The IRS wants to read the receipt. If it's faded you might get sympathy from the examiner, but no deduction.
January 29, 2026
News
In years past an employee could deduct unreimbursed employment expenses such as work clothes, tools, travel, etc. The Tax Cuts and Jobs Act of 2017 stopped that and the change was made permanent by the One Big Beautiful Bill. In Sohail S. Hussaini (T.C. Memo. 2025-82) the taxpayer was working on site for a military contractor. He was classified as an employee and was not reimbursed for his travel expenses. The taxpayer claimed the expenses under the category for military reservists, performing artists, and fee based government officials. The Court held the taxpayer did not qualify under these specifically limited classifications and denied the taxpayer a deduction.IRS Tax Tip 2026-7 reminds taxpayers they must report the sale or disposal of digital assets. If you receive a Form 1099-DA the form may or may not include your basis (basis is not yet required to be reported). If there's no basis reported you must calculate your own basis. And you must report the sale even if you do not receive a Form 1099-DA. Click on the link above for links to additional resources.
Tip of the Day
Disregarded entities . . . For most taxpayers that means a single member LLC. If you're the only owner in an LLC the IRS considers it a disregarded entity and, instead of reporting the income from a sole proprietorship on a separate return, you report it on Schedule C of your personal return. If the LLC's only activity is the holding of rental real estate, you report the income on your Schedule E of your 1040. Most, but not all states, follow the same rule. Check the rules for the states in which you do business. And check to make sure you don't have to file another form. New York state requires all LLCs to file a one-page report and most will be liable for a fee. Check the rules in your state.
January 28, 2026
News
The IRS has issued (IR-2026-13) frequently asked questions in Fact Sheet 2026-02 to help taxpayers, businesses, and other stakeholders understand the changes under Executive Order 14247: Modernizing Payment To and From America's Bank Account. These changes apply to:
Electronic payments are generally processed faster, cost less to handle, and reduce errors compared to paper payments. Limited exceptions to electronic payment requirements will be available in specific situations, such as those involving hardship and/or legal or procedural requirements.
Tip of the Day
Watch for frequency changes in filing requirements . . . In many states filing frequency for sales tax is dependent on sales volume or taxable sales. In New York you may only have to file annually, or you may have to file quarterly or monthly. Employment tax deposits may be due monthly or within a certain number of days of the payroll. Check the rules regularly, but more frequently if you're approaching a break point.
January 27, 2026
News
Notice 2026-09 provides guidance relating to amendments under the Consolidated Appropriations Act, 2023, known as the SECURE 2.0 Act of 2022 (SECURE 2.0 Act) for an individual retirement arrangement (IRAs) under Section 408(a), (b), or (h) of the Code, an employer's SEP arrangement under section 408(k), and an employer's SIMPLE IRA plan under Section 408(p). This notice provides that the IRS has extended the deadline to make certain amendments for IRAs, SEP arrangements, and SIMPLE IRA plans to December 31, 2027 because the Treasury Department and the IRS are still developing model language that may be used by IRA trustees, custodians, and issuers to amend an IRA for compliance with the Acts.
Tip of the Day
Form 1099-K reporting . . . Payment card companies, payment apps, and online marketplaces will be required to send you a Form 1099-K only if the amount of your business transactions during the year is more than $20,000 and the total number of your transactions is more than 200.
January 26, 2026
News
The IRS has issued (IR-2025-10) frequently asked questions in Fact Sheet 2026-01 related to the new deduction for qualified overtime compensation under the One, Big, Beautiful Bill. For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the amount that exceeds their regular rate of pay (generally, the "half" portion of "time-and-a-half" compensation) and is reported on a Form W-2 or Form 1099. These FAQs contain additional information about the deduction, provide resources for employees (including federal employees) to assist them in determining whether they received qualified overtime compensation under the Fair Labor Standards Act, and contain useful information regarding the differences in reporting requirements for tax year 2025 and 2026-2028. Treasury and IRS previously issued Notice 2025-62 providing penalty relief to employers and other payers for tax year 2025 regarding new information reporting requirements for qualified overtime compensation; and issued Notice 2025-69 for workers eligible to claim the deduction for overtime compensation for tax year 2025.
January 23, 2026
News
Setting up a captive insurance company and payimg the premiums to an affiliate sounds like a way to save taxes, but it's not that easy. In Curtis K. Kadau and Lori A. Kadau, Deceased, Curtis K. kadau, Personal Representative (T.C. Memo. 2025-81) the taxpayer was a shareholder of an S corporation that incurred expenses for purported insurance coverage provided through an arrangement with its affiliated captive insurance company. The IRS attacked the arrangement, claiming it did not provide actual insurance and that the taxpayers could not deduct the amounts paid to the captive insurance company. To be deductible the amounts paid must be for true insurance. The Court looked at four factors to see if (1) the arrangement involves an insurance risk; (2) the arrangement shifts the risk of loss to the insurer; (3) the insurer distributes its risk among its policyholders; and (4) the arrangement is insurance in the commonly accepted. The Court noted there was a lack of risk distribution, the captive insurer was undercapitalized, and the contracts were not at arm's length (they were 2.5 to 3.5 times more per dollar of coverage than comparable commercial policies). The Court found the payments were not for insurance and therefore were not deductible. In addition, the Court sustained the accuracy-related penalties imposed by the IRS.
Tip of the Day
The box approach . . . Some people are excellent recordkeepers; some are just good. And some are terrible. If you fall in the latter category, just throw the documents you receive in the mail, required receipts, etc. into a box. Having unorganized documentation is far better than no documentation. Email statements? Create a directory in which to save the statements. You should also ask your accountant what he prefers. Many don't want to look at paper and prefer a PDF file.
January 22, 2026
News
Awards or compensation for physical injury and sickness are generally not taxable (under Sec. 104). In Adrienne Mennemeyer (T.C. Memo. 2025-80) the taxpayer received a monetary settlement in an arbitration case from a former employer in compensatory and punitive damages for defamation and related economic claims. The Court noted that damages are on account of personal physical injuries or physical sickness if there is a direct causal link between the action giving rise to the damages and the physical injury or physical sickness. Personal injuries are not enough. Only physical personal injuries qualify. When damages are received pursuant to a settlement agreement, the nature of the claim that gave rise to the settlement controls whether the damages are excludable under Sec. 104. While the taxpayer claimed she had a physical aliment arising from a difficult work environment with the employer, the settlement agreement did not mention personal injuries, nor was there any indication that the settlement was for physical injuries. Moreover the Court did not find the settlement agreement ambiguous. The Court found the entire settlement taxable.
Tip of the Day
Annual reports, statements, etc. . . . This is not only the time of the year to file income taxes, if you own a business you may also have to file an annual report. Many states require a report that includes officers, board members, shares outstanding, etc. plus a fee. The rules vary widely as does the required information. In some cases the report is due on the anniversary of the corporation or creation of the entity. Failure to file the report can jeopardize the entity's legal standing with serious consequences.
January 21, 2026
News
In Abdul Khaliq Mustafa Muhammad (T.C. Memo. 2025-77) was found to have underreported income and failed to substantiate his deductions. The Court reviewed the record and found the taxpayer engaged in repeated underreporting of income, claimed numerous deductions and expenses beyond receipts, failed to keep adequate records, and failed to cooperate with tax authorities. Considering the taxpayer's background (degrees in business and taxation and was and IRS employee) and his refusal to provide any testimony to reconstruct records, the existence of several badges of fraud in this matter was persuasive circumstantial evidence of fraud. The Court was continually frustrated by the taxpayer's failure to provide adequate explanations despite having been provided opportunities to do so. The Court concluded that the IRS has established, by clear and convincing evidence, that the taxpayer's underpayments of tax for the years in issue were attributable to fraud.
Tip of the Day
Contributions to a governmental paid family leave program . . . Beginning in 2025, if you made contributions to a governmental paid family leave program, you will now include the fullamount of those contributions in your income. If you itemize your deductions on Schedule A, you can include the amounts contributed as part of the state and local taxes that you paid.
January 20, 2026
News
The IRS has confirmed (IR-2026-09) that supplemental basic allowance for housing payments made to members of the uniformed services in December 2025 are not to be included in income by those who received the payments; they are not taxable. In the One, Big, Beautiful Bill enacted last July, Congress appropriated $2.9 billion to supplement the basic allowance for housing payable to members of the uniformed services. In December, the President announced that 1,450,000 military service members would receive a special "Warrior Dividend" before Christmas. The resulting one-time supplemental payments of $1,776 made primarily to active-duty members of the uniformed services in the pay grades of O-6 and below and eligible Reserve Component members as of Nov. 30, 2025, of the Army, Air Force, Navy, Marine Corps and Space Force were funded by this appropriation. Federal tax law specifically excludes from gross income a "qualified military benefit." The basic allowance for housing payments are qualified military benefits and, therefore, are not taxable.
Tip of the Day
What's the threshold for reporting income? . . . Basically all gross income is reportable unless excluded. And the exclusions are few. Some online posts have suggested that if the income isn't reported on a 1099, it doesn't have to be reported on a tax return. That's not true. Technically if you mow a couple of yards in the neighborhood the gross amount has to be reported and the net amount is taxable. There is no lower limit. Talk to your tax adviser when preparing your return.
January 16, 2026
News
Notice 2026-13 provides guidance for certain retirement plan administrators, updating safe harbor explanations to reflect tax law changes made after Aug. 6, 2020. Notice 2026-13 provides a safe harbor explanations that may be used by plan administrators when they provide written explanations to retirement plan participants about eligible rollover distributions, satisfying their requirements under section 402(f). In the notice, the first safe harbor explanation applies to non-Roth accounts and the second safe harbor explanation applies to Roth accounts. The notice also addresses, among other things, changes to the 10% additional tax on early withdrawals from retirement plans, the required minimum distribution rules for surviving spouses, and the increased age for determining required beginning dates for required minimum distributions. Plan administrators may customize these safe harbor explanations as appropriate. For instance, if the plan does not hold after-tax employee contributions, the plan administrator could eliminate that section of the safe harbor explanation. This guidance modifies the safe harbor explanations previously provided in Notice 2020-62.
Tip of the Day
Need to file a gift tax return? . . . If you made any gifts to relatives or others over the $19,000 exclusion amount in 2025 you have to file a gift tax return. It's due at the same time as your individual return and an extension of your individual return applies to the gift tax return too. If you made a gift of cash or marketable securities the return isn't that complicated. Things get tricker if you made a gift of property. While there's unlikely to be any current tax liability, each gift will reduce your estate tax exclusion. If your state has an estate tax it probably has a gift tax and you'll probably have to file return there too.
Copyright 2026 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536