This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2024.
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Individuals
Taxation of undocumented immigrants
Certain tax rules and considerations specifically affect undocumented immigrants in the United States and their common circumstances, such as being ineligible for certain tax credits.
Sheriff’s withdrawal from jail food account was an unauthorized loan
The Tax Court denied the IRS’s argument that the money, which the sheriff had repaid, was includible in her income as embezzled funds.
The close of deferral: Planning for the QOZ end game
Many investors in qualified opportunity zones face a large upcoming tax hit when their QOZ deferral ends. They should consider harvesting stock market losses in advance of it.
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 2024.
Planning for the AMT
Strategies can include accelerating income recognition or deferring deductions, certain tax elections, and optimal use of AMT net operating losses.
Higher threshold for Form 1099-K reporting among AICPA priorities
In a letter to congressional finance leaders, the AICPA listed increasing the threshold to $10,000 as one of its priorities.
Taxpayer denied theft loss deduction for investment loss
The Tax Court focused on the taxpayer’s role as president and managing director of the company in which he invested, along with his failure to prove a theft occurred.
Lower auto depreciation limits issued for first time in at least 3 years
The IRS issued the 2025 depreciation limitations for passenger vehicles, including those for which bonus depreciation is applied.
Final regs address taxes on gifts to taxpayers from ex-U.S. citizens, residents
The final regulations implement Sec. 2801, added to the Code in 2008, and follow up on proposed regulations issued 10 years ago.
Alternative methods allowed for identification of digital assets
The IRS provided temporary relief that permits eligible taxpayers to use alternative methods to make adequate identification of digital asset units sold, disposed of, or transferred in 2025.
Seller beware: Repossessions in real estate installment transactions
Sellers financing a sale of real property are subject to gain recognition under Sec. 1038 if they repossess the property upon the buyer’s default.
Strategies for information return penalties and Form 945 assessments
Penalties for failure to file correct information returns and backup withholding can be waived, but timely and correct responses to IRS notices are essential.
Business standard mileage rate increases for 2025
The IRS increased the optional standard mileage rate used to calculate the deductible costs of operating a vehicle for business to 70 cents per mile driven, up 3 cents from 2024.
Applicability date set for required minimum distribution regulations
Treasury and the IRS announced that certain portions of future regulations finalizing the proposed regulations for required minimum distributions will apply beginning in the 2026 distribution calendar year.
IRS amends rules for computing the premium tax credit
The IRS released final regulations that amend the definition of “coverage month” and amend other rules in existing income tax regulations for computing the premium tax credit.
Burden of proof: The shoebox method and 9-martini lunch
When taxpayers claim deductions for business expenses, they must meet their burden of proof with proper recordkeeping.
Dealing with sales between related persons
Losses may be disallowed for sales or exchanges between related parties.
Planning opportunities: Sec. 179 expensing vs. bonus depreciation
As bonus depreciation phases out, practitioners need to consider Sec. 179 expensing to maximize deductions on fixed-asset purchases.
IRS will accept duplicate dependent returns submitted with an IP PIN
Beginning with the 2025 filing season, the IRS will accept Forms 1040, 1040-NR and 1040-SS even if a dependent has already been claimed on a previously filed return if the primary taxpayer on the second return includes a valid identity protection personal identification number.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
