The IRS has issued guidance implementing the Patient Protection and Affordable Care Act’s prohibition on reimbursement of the cost of over-the-counter drugs by HSAs, HRAs, Archer MSAs, and FSAs, which allows reimbursement for an OTC drug only if the individual has a prescription for the drug.
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Individuals
IRS Confirms That Mortgages Over $1 Million Can Be Deductible
The IRS has ruled that indebtedness incurred by a taxpayer to acquire, construct, or substantially improve a qualified residence can constitute home equity indebtedness to the extent it exceeds $1 million.
IRS Releases Some Annual Inflation Adjustments, Many Unchanged for 2011
The IRS released its annual revenue procedure making inflation adjustments for various credits and other tax items.
The Tax Consequences of Point-Based Employee Reward Programs
This article explores the tax consequences of point-based employee recognition programs.
Tax Law Changes Will Delay Start of Filing Season for Some Taxpayers
The IRS is warning taxpayers that it will not be accepting certain 2010 individual tax returns until mid- or late February, due to tax law changes recently enacted by Congress.
IRS Releases 2011 Tax Tables and Other Inflation Adjustments
The IRS released the 2011 tax rate tables and other inflation adjustments, which it had been holding while waiting for Congress to resolve various tax issues.
Federal Court Rules Health Care Insurance Mandate Unconstitutional
A federal district court has held that the health care reform legislation’s mandate that individuals obtain health insurance is unconstitutional.
IRS Releases 2011 Standard Mileage Rates
The IRS released the standard mileage rates for use in 2011.
Planning for the New Medicare Taxes
The recently passed 2010 health care reform legislation added two additional Medicare taxes intended to help pay for the new legislation. This item looks at the details of both the 3.8% investment income tax and the 0.9% hospital insurance tax increase and reviews some of the effects they will have on estimated taxes and tax planning.
Grouping Rental Real Estate Activities Under Regs. Secs. 1.469-4 and 1.469-9
This item reviews fundamental relationships of the grouping of activities under Regs. Sec. 1.469-4 and the grouping of rental real estate activities under Regs. Sec. 1.469-9.
Remodel or Rebuild? How the Decision Could Affect the Sec. 121 Exclusion
The recent Gates decision forces practitioners to reexamine the types of questions they ask a client during tax planning or their annual tax interview if the client has sold his or her personal residence.
Elections to Direct Credit Card Rebates to Qualified Charities
In a letter ruling, the IRS addressed the common concept of credit card companies allowing their customers to request that their credit card rebates be donated to charity.
Classification as a Statutory Employee
Statutory employee status may be beneficial for both an employee and his or her employer; however, an employee must meet specific requirements to qualify as a statutory employee. This article discusses the rules regarding statutory employee status set out in the Code and the regulations and how these rules have been interpreted by the IRS and the courts.
District Court Rules That Same-Sex Married Couples May File Joint Returns
This item discusses the impact of a recent case in Massachusetts in which a federal district court held that Section 3 of the Defense of Marriage Act is unconstitutional because it violates the equal protection principles of the Fifth Amendment’s Due Process clause.
Sec. 121 Exclusion of Gain from Sale of a Principal Residence
This item reviews the Tax Court’s decision to side with the IRS in the Gates case denying a exclusion under Sec. 121 and the possible implications for taxpayers.
Tax Court Again Holds That Innocent Spouse Relief Limit Is Invalid
Despite being overruled by the Seventh Circuit in an earlier case, the Tax Court has again held that the regulatory two-year limitation period for filing a claim for equitable innocent spouse relief under Sec. 6015(f) is invalid. This item assesses the Tax Court’s arguments in Hall, 135 T.C. No. 9 (2010).
Individual Taxation Report: Recent Developments
This article covers recent developments affecting the taxation of individuals, including health care reform and other legislation, regulations, cases, and IRS guidance. The items are arranged in Code section order.
Maximizing the Use of the Special $25,000 Rental Real Estate Loss Allowance
Even though rental income or loss is generally passive, a special rule allows qualifying individuals and estates to offset up to $25,000 of nonpassive income with rental real estate losses and credits. This column describes the criteria needed to qualify for the $25,000 deduction.
Comparing International Tax Systems in the Introductory Tax Class
This column describes an assignment that requires a modest time commitment to bring international tax issues into the introductory tax course and to raise student awareness of differences in tax systems.
IRS Rules That Mortgages Over $1 Million Can Be Deductible
The IRS has ruled that indebtedness incurred by a taxpayer to acquire, construct or substantially improve a qualified residence can constitute “home equity indebtedness” to the extent it exceeds $1 million, up to an excess of $100,000.
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.
