The IRS has issued temporary regulations on how to elect to use a deceased spouse’s unused exclusion from estate taxes, also known as the portability election.
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Eleventh Circuit Says PTIN User Fees Are Valid
The Eleventh Circuit held that the fee the IRS charges to issue PTINs to tax return preparers, who are required to use the PTINs on returns they prepare, is valid
Proposed Regs. on Basis for S Corporation Shareholders From Bona Fide Indebtedness
The IRS issued proposed regulations on when an S corporation shareholder can increase basis in the S corporation’s stock based on loans to the corporation.
IRS Issues Regulations on “Expatriated Entities” Under Sec. 7874
The IRS issued final, temporary, and proposed regulations intended to prevent abusive corporate inversion transactions.
Refusal to Refund Sewer Assessments Is Not Equal Protection Violation, Supreme Court Holds
The Supreme Court held that Indianapolis’s refusal to refund sewer assessments paid in a lump sum by residents to fund a sewer project did not violate the Equal Protection Clause of the U.S. Constitution.
Appeals Court Invalidates Associated Property Rule in Capitalization Regulations
The Federal Circuit held that the “associated property” rule requiring capitalization of interest expense under Sec. 263A was invalid insofar as it applies to property temporarily withdrawn from service.
First Circuit Strikes Down Defense of Marriage Act but Stays Tax Remedies
The First Circuit Court of Appeals declared part of the federal Defense of Marriage Act unconstitutional, upholding a Massachusetts federal district court decision.
Guidance Issued on New $2,500 Health FSA Limit
The IRS guidance on implementation by employers of the $2,500 annual limit on employee salary reduction contributions to health flexible spending arrangements.
Prop. Regs. Clarify Meaning of “Substantial Risk of Forfeiture” Under Sec. 83
The IRS issued proposed regulations that would clarify when a substantial risk of forfeiture exists on the transfer of stock to an employee that is treated as compensation under Sec. 83.
IRS Issues Guidance, Requests Comments on Smart Cards and Debit Cards Used for Transit Fares
The IRS asked for comments on issues regarding the use of smart cards and debit or credit cards to pay transit fares.
IRS to Close Offices as Part of Administration’s Cost-Cutting Efforts
The IRS announced that 43 smaller offices will be closed and space in many larger facilities will be reduced
Offer in Compromise Rules Made More Flexible in Expansion of Fresh Start Program
The IRS announced that it is making the terms under which it will accept offers in compromise more flexible.
Final Regs. Issued on Health Insurance Premium Tax Credits
The IRS issued final regulations governing the Sec. 36B health insurance premium tax credit enacted by 2010’s health care legislation.
Accounting Firm Payments to Owners Flunk Independent Investor Test
The Seventh Circuit held that an accounting and consulting firm organized as a C corporation could not deduct payments to related entities because they were dividends, not compensation for services rendered by the firm’s owners.
Farm Debtors Must Pay Capital Gain Tax in Full, the Supreme Court Holds
The U.S. Supreme Court ruled that farmers who sold farm assets during a bankruptcy reorganization under Chapter 12 of the Bankruptcy Code were liable for the full amount of the capital gains tax that resulted from the sale
Obligations Arising From Certain Upfront Payments Made by CFCs Are Not U.S. Property
The IRS issued temporary regulations relating to the treatment of upfront payments made pursuant to certain notional principal contracts for federal income tax purposes.
Illinois “Click-Through Nexus” Law Held Unconstitutional
The Circuit Court for Cook County in Illinois issued an eagerly awaited order explaining its bench decision on April 25, which declared Illinois’s “click-through nexus” law unconstitutional.
TIGTA and Congress Focus on Identity Theft and Tax Fraud
The House Ways and Means Oversight and Social Security Subcommittees held a hearing on tax fraud involving identity theft and TIGTA released a report saying the IRS does not handle identity theft issues well.
Final Regs. Explain Allocation of Deduction for Prepaid Mortgage Insurance Premiums
The IRS issued final regulations governing the allocation of prepaid mortgage insurance premiums for periods after Dec. 31, 2010.
Terms in OIC Agreement Take Meaning From Code, Court Holds
The Second Circuit held that the terms “refund” and “overpayment” in an OIC agreement are specialized tax terms that take their meaning from the Code and are not given their “plain English” meanings, despite the colloquial tone of the agreement.
INDIVIDUALS
Current Developments in Taxation of Individuals: Part 1
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2025.
