This semiannual update covers recent federal tax developments involving individuals, highlighting noteworthy IRS guidance and decisions of the Tax Court and other courts, as well as tax changes made by legislation.
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TOPICS / INDIVIDUALS
Deductions
Prior business success lends credence to donkey breeder’s profit motive
Taxpayers had a profit motive for their donkey-breeding activity.
Standard mileage rates to go up in 2022
The IRS issued the annual update of the mileage rate taxpayers may use to compute their deductible automobile costs.
Minimizing a hobby loss issue by electing S status
To avoid the hobby
loss rules, with
their limitation on
deductible expenses,
an activity must be
engaged in for profit;
electing S status
can help a taxpayer
establish profit
motive.
Alimony deduction and income exclusion allowed for insurance premiums
Alimony deduction for health insurance premiums paid for a taxpayer’s wife that were excluded from his income did not result in a double deduction;
Meal portion of per diem allowance can be treated as attributed to a restaurant
An IRS notice provides a special rule for the temporary 100% deduction.
Tax treatment of COVID-19 homeowner relief payments clarified
A revenue procedure clarifies Homeowner Assistance Fund payments are excluded from gross income and gives a safe harbor for computing certain itemized deductions.
Proving employee business expense deductions
Because unreimbursed employee business expenses will be deductible again in 2026, and court cases involving disputes on tax returns for years before 2018 continue to make their way through the courts, knowledge of the details of the unreimbursed employee business expense deduction remains important.
Tax Court rules on property basis reduction timing
The Tax Court held that a taxpayer was required to reduce the bases of depreciable real properties to calculate the basis adjustment necessary for determining the amount of the QRPBI discharge that may be excluded from income.
Theft loss deduction requirements
In a recent case, a taxpayer was unable to prove that a theft had actually occurred or that, if one
had occurred, he had sustained the loss during the taxable year as required by Sec. 165(e).
AICPA recommends QBI improvements
The AICPA recommended in a letter to Senate tax-writing leaders eight ways to improve the deduction for qualified business income under Sec. 199A.
Male couple cannot deduct medical expenses related to having a baby
The IRS ruled against the deductibility of medical expenses arising from the couple’s use of gestational surrogacy, in vitro fertilization procedures, and related items.
IRS updates business travel per-diem rates
The allowances for determining deductions for lodging, meals, and incidental costs are slightly higher than before.
Illinois PTE tax would provide SALT cap workaround
This item discusses Illinois Legislature’s S.B. 2531, which includes a PTE tax that allows a workaround to the federal $10,000 limitation for state and local tax deductions.
Individual tax update
This semiannual update surveys recent federal tax developments involving individuals.
Donor has no standing to sue donor-advised fund
A suit challenging the actions of a donor-advised
fund by a donor to the fund was dismissed because the plaintiffs lacked standing.
AICPA recommends QBI improvements
The AICPA recommended in a letter to Senate tax-writing leaders eight ways to improve the deduction for qualified business income under Sec. 199A.
Business meal deductions after the TCJA
This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.
Sec. 199A and Subchapter M: RICs vs. REITs
Sec. 199A, may create a potential difference in how the same type of income is taxed to shareholders of RICs and REITs and therefore offers an opportunity for fund managers.
‘Restaurant’ defined for 100% deductible business meals in 2021 and 2022
The IRS issued guidance on the temporary rule that allows a 100% deduction for eligible restaurant meals in 2021 and 2022.
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.
