The IRS Office of Chief Counsel has issued a memorandum in which it reinterprets the definition of “acquisition indebtedness” to allow a taxpayer to deduct interest on the first $1.1 million of his or her mortgage instead of the usual $1 million limit.
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TOPICS / INDIVIDUALS
Deductions
Charitable Contribution of Qualified Conservation Easement
The Tax Court held that a conservation easement of air space over an historic structure that was donated by a taxpayer to a nonprofit organization did not meet the requirements to be considered a qualified conservation easement.
New Rules Seek to Clarify Allocation and Reporting of Mortgage Insurance Premiums
The IRS recently issued temporary regulations that explain how to properly determine the deductible amount of mortgage insurance premiums.
Deducting Donated Services and Out-of-Pocket Expenses
A taxpayer who has limited resources but wants to make a deductible charitable contribution has limited options. While a deduction is not allowed for the value of charitable volunteer work, unreimbursed expenses may be deductible.
Individual Taxation Report
This article covers recent significant developments affecting taxation of individuals, including cases, IRS guidance, and legislative changes.
Deductibility of Bankruptcy Costs and the Origin of the Claim
Costs incurred in a bankruptcy filing can be categorized as either personal or business related. A taxpayer cannot deduct those categorized as personal expenses but can deduct those categorized as business expenses.
New Car Buyers in States with No Sales Tax Can Still Take Sales Tax Deduction
The IRS announced that new car buyers in states with no sales tax are entitled to take the new car sales tax deduction under Sec. 164(b)(6).
Leasing Business Autos
Automobile leases have certain advantages. They require a minimal investment and are convenient if the customer replaces the car every two or three years. With a lease, there is no hassle with selling or trading in the car. Instead, the lease customer simply drops it off at the end of the lease and arranges another lease for a new one.
AICPA Comments on Charitable Contribution Substantiation Prop. Regs.
The Forensic and Valuation Services Executive Committee and the Tax Executive Committee of the AICPA have sent comments to Treasury on proposed regulations’ provisions regarding appraisals and individuals performing appraisals.
Economic Stabilization Act Extends Expired Provisions and Repeals MLTN Standard
The Emergency Economic Stabilization Act extends various tax benefits that expired at the end of 2007 and repeals the “more likely than not” standard for return preparers
Reminder: Support Your Auto Expense
Editor: Michael D. Koppel, CPA, PFS Auto expenses are a very common deduction for business owners and employees who must travel. Often the taxpayer does not know the exact amounts necessary to calculate the proper deduction and the tax preparer must estimate the mileage, business percentage, and ultimate auto deduction
Tax Aspects of Contributing a House to a Fire Department
Taxpayers can obtain a charitable contribution deduction for the fair market value of property donated to a fire department to be burned down. The taxpayer needs to properly structure the transaction so that the property, and not just the right to use the property, is being donated.
When Are Payments Treated as Child Support?
Payments are child support for tax purposes if they are either so designated in the divorce or separation agreement (fixed child support) or deemed to be child support.
Prop. Regs. Govern Charitable Contribution Substantiation and Reporting
Tthe IRS issued proposed regulations that would change the rules regarding substantiation and reporting of charitable contributions.
Individual Taxation Report
This article covers recent developments affecting taxation of individuals, including legislation, regulations, and IRS guidance.
Tax Planning for Elderly Clients
With the rapid increase in the number of elderly clients, tax practitioners will need to become familiar with the special issues that affect tax compliance and planning for the elderly.
Getting the Most from Individual Charitable Contributions
This article discusses the issues involved in determining whether a charitable contribution is deductible, what the amount of a contribution is, and when and how much of a contribution is deductible.
Converting a Residence to Rental Property
A decision to convert to rental should consider factors such as the taxpayer’s marginal tax rate, availability of excluding gain from the sale of a personal residence, expected growth rate of the rental property, length of time the house will be rented before being sold, cash flow from renting, effect of the passive activity rules, and rate of return on other invested funds.
Federal, State, and Local Tax Incentives for Environmental Remediation Costs
This item provides a high-level overview of the most common federal, state, and local tax incentives and a brief update of the federal rules regarding the expensing of environmental remediation costs.
IRS Updates Rules for Substantiating Travel Expenses
The IRS updated the rules for substantiating an employee’s travel expenses using reimbursement arrangements, per diem allowances, or the high-low method.
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.
