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August 28, 2025
News
The IRS is advising tax professionals should always remain alert to any scams and protect their client data. A common scam geared towards tax pros aims to collect their Electronic Filing Identification Numbers. Review this Tax Tip 2025-57 for details about how this scam works and how to protect your clients and your business. In an EFIN scam the scammer poses as a tax software provider and emails the tax pro with a request to provide their EFIN information by fax. When the tax pro faxes back their EFIN information, the scammer uses the information to steal client data and file fraudulent tax returns for refunds. Click on the link for more information.The IRS is inviting the public to provide anonymous feedback on tax preparation and filing options, which will run through Sept. 5, 2025. This survey is being conducted as part of the Department of Treasury and IRS efforts to fulfill a reporting requirement to Congress under the OBBB. Treasury will deliver a report to Congress by Oct. 2, 2025, on several key issues related to free tax filing options for the public.
Tip of the Day
Investment tax credit . . . There's no longer a federal investment tax credit. While it was big in the first half of 1980's it was repealed and replaced by faster depreciation. But some states have an investment tax credit, often aimed at specific segments of the economy such as farming or manufacturing. Check the rules in your state.
August 27, 2025
News
https://assets.msn.com/staticsb/statics/latest/slideshow-wc/icons/flipper-next.svg The IRS has relaeased (Rev. Rul. 2025-16) the interest rates under the Farm Credit System to be used to compute the special use value of real property used as a farm for which an election is made under Sec. 2032A for estate that value farmland under Sec. 2032A in 2025.The IRS has lost about a quarter of its employees since the beginning of the year and now finds itself deficient in some mission critical positions and is now looking to fill some slots. Some employees who signed up for deferred resignations are being offered to rescind the decision and remain with the Service.
Tip of the Day
Thermal paper . . . Heat sensitive paper was a staple in the early days of the fax machine. While even fax machines seem to be long gone, thermal paper is still in frequent use in store cash registers. There are several reasons for the use, but permanency isn't one of them. The info on the paper will fade in time--faster the higher the temperature. That may not mean much on your grocery store tape, but not so much if you need a record for tax purposes. If you can get an email receipt, request it. If thermal is your only option, consider scanning or copying the receipt before it fades.
August 26, 2025
News
The IRS announced (IR-2025-87) that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2025. For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the rates:
The IRS has updated (NM-2025-03) the locales where individuals and businesses in parts of New Mexico affected by severe storms, flooding, and landslides that began on June 23, 2025 are eligible for relief. The areas now include Dona Ana County. As a result the complete list of counties that qualify for relief now includes Chaves, Doña Ana, Lincoln, Otero, and Valencia. Click on the link above for more information.
Tip of the Day
Scams and more scams . . . The internet has brought us untold conveniences, savings, speed, etc. It has also brought us untold scams. And, unfortunately, they're getting more convincing. There are some tricks that can help you avoid getting scammed. First, look carefully before you click on any emails or text messages. Do you know the person they're coming from? If it's a business, do you deal with them? Same is true of government agencies. Keep in mind that scammers will use the name of a business or organization that is common to many people. If it's a bank, it'll be a big one with many customers, not your local credit union. Second, check the email address. Most businesses use their web address as part of their email address. For example Fred Flood at Madison Paper will have an email address like FFlood@madisonpaper.com. This isn't a foolproof test, but if it's FFlood@gmail.com it's probably a scam. Third, only scammers want to deal in gift cards or crypto or similar "currencies". The reason? They're harder or impossible to trace. Fourth, forget caller ID. Scammers can easily spoof a phone number to come up as something else. Fifth, a scammer may not be after money, but your information. Credit card info, medicare and social security numbers, personal info such as age, etc. can be readily sold, often frequently on the web. Finally, if there is urgency involved you should be suspicious. That goes for legitimate deals as well as scams. Act today for your 20% discount. Chances are it's an overpriced offer. They want you to sign immediately so you don't have time to compare prices.
August 25, 2025
News
In Silver Moss Properties, LLC, Silas Mine Investments, LLC, Tax Matters Partner (165 T.C. No. 4) the partnership claimed a charitable contributions for a donated a conservation easement. The IRS denied the deduction and the taxpayer sought relief in the Tax Court. The IRS amended its answer to include the civil fraud penalty. The taxpayer contended that the Tax Court is barred from adjudicating the civil fraud penalty because U.S. Const. amend. VII guarantees a right to trial by jury in such actions, which is not an option in this Court. The Court held U.S. Const. amend. VII does not apply to suits against the sovereign, and Congress has not otherwise consented to trial by jury in TEFRA partnership-level actions and that the "public rights" exception to U.S. Const. amend. VII applies to a civil fraud penalty under Sec. 6663(a). Finally, the Court held it could adjudicate a Sec. 6663 civil fraud penalty.
Tip of the Day
Late filing penalties for business returns . . . For individual returns filed late the most costly penalties are based on the amount of tax owed. But for S corporations and partnerships, there's usually no tax due. Here the penalty for late filing is $245 per month, per shareholder or partner. For example, during 2024 Fred owned 50 percent of Madison for the full year; Sue owned 50 percent for the first six months of the year but sold her shares to Sharon in early July. The penalty for filing one month late would be $735; three months late would be $2,205. There's also a good chance your state (or states if you do business in more than one state) will also impose a penalty.
August 22, 2025
News
The IRS has issued frequently asked questions (FAQs) in Fact Sheet 2025-05 relating to the modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D under the One, Big, Beautiful Bill Act (OBBBA). These FAQs provide guidance on several energy credits and deductions that are expiring under OBBBA and their termination dates. The FAQs also provide clarification on the availability of the new clean vehicle credit, the energy efficient home improvement credit and the residential clean energy credit, among others. Click on the link above for more information.
Tip of the Day
Making decisions under stress . . . Making important decisions under many stressful conditions can lead to poor judgment. For example, bidding on a job after losing an important bid or job can make you want to low ball the next bid. You can still make a bid, jusr make sure you're doing so with a clear head.
August 21, 2025
News
Notice 2025-44 announces that Treasury and the IRS intend to issue proposed regulations withdrawing the disregarded payment loss ("DPL") rules under Sec. 1.1503(d)-1(d)(consolidate return regulations). The DPL rules were finalized on January 14, 2025 and are applicable with respect to losses incurred in taxable years beginning on or after January 1, 2026. In addition, this notice announces an extension of the transition relief initially announced in Notice 2023-80 with respect to the interaction of the dual consolidated loss ("DCL") rules and the model rules published by the OECD/G20 Inclusive Framework on BEPS (the "GloBE Model Rules"). The notice extends the transition relief such that the DCL rules would generally be applied without respect to the GloBE Model Rules for losses incurred in taxable years beginning before January 1, 2028.The Treasury Inspector General for Tax Administration (TIGTA) has issued a report concerning the termination of IRS probationary employees earlier this year. TIGTA noted that the termination letters notified employees that they were terminated for performance reasons and current mission needs. TIGTA was advised that probationary employees did not have documented performance issues. TIGTA's evaluation focused on the actions and processes that the IRS followed when it sent termination notices in February and March 2025 to probationary employees. For the full report, go to www.tigta.gov/sites/default/files/reports/2025-08/2025ier028fr.pdf.
Tip of the Day
Pick a partner carefully . . . Picking a business partner, or even a rental property partner, depends on a number of factors such as their business skills, their attitudes, etc. But one factor that's often overlooked is their financial stability. Say Sue and Fred go 50-50 on a service business. The business is doing well, but Fred's a gambler and not only exhausted all his funds but got debt in debt. On declaring bankruptcy Fred has to give up his interest in your combined business. This isn't a problem if the partner has only a 5 or 10% interest. Talk to your attorney. There can be ways to protect yourself if you're concerned.
August 20, 2025
News
Notice 2025-45 announces that the Internal Revenue Service intend to issue proposed regulations under Sections 897(d) and (e) that modify the application of the rules described in Reg. Secs. 1.897-5T and 1.897-6T, Notice 89-85, and Notice 2006-46, to certain transactions involving the transfer of United States real property interests ("USRPIs"). The regulations will propose to revise the rules that apply to inbound asset reorganizations under section 368(a)(1)(F) that constitute a "covered inbound F reorganization" as defined in section 3.02 of the notice.
Tip of the Day
Check credit reports regularly . . . Even if you're not looking for a new credit card, car loan, etc., you should check your credit report at least once a year. That means review the report, not just your credit score. A lot more gets reported than you might think. Besides your payment history on a mortgage, credit card, or car loan, many businesses report late or failures to pay. Didn't pay that bill for $500? It could show up and reduce your credit score. Late payments on utility bills, or any open account could affect your score. Those negative marks could affect your score for some time--and they may be incorrect. You did pay that $500 bill, the vendor didn't properly record the receipt. Issues like that are much easier to correct when they're young.
August 19, 2025
News
If you're converting personal property to a rental property you need to start taking depreciation. Normally depreciation is equal to your cost (or with reference to your basis in an exchanged property). But it's more complicated if you owned the property for a time and then converted it to a rental or business property. In that case your basis for depreciation is the lesser of your cost or the fair market value at the time of conversion to rental or business. In Sherman Derell Smith (T.C. Memo. 2025-24) the propeety was first held for rent in 2017 but the taxpayer did not file his return for 2018 until 2024. The taxpayer took depreciation but could not show the fair market value of the property at the time of conversion. The Tax Court found the sources the taxpayer used were far too inaccurate the meet the standards required by the law. In addition, because the property was acquired as a result of a loan to a relative that transformed into a tenant-in-common situation and finally ownership, the taxpayer did not prove his cost basis to the satisfaction of the Court. The Court disallowed any deductions for depreciation.
Tip of the Day
Jurisdiction . . . From time-to-time when discussing Tax Court the Court has declined to rule on an issue because of jurisdiction. Jurisdiction is a general term regarding the power of a court. In the case of the Tax Court it can refer to an issue that was not properly brought up originally but it's more likely that subject matter jurisdiction is a result of the Tax Court's authority is limited to tax cases and then not all tax issues..
August 18, 2025
News
If you get a Form 1099 for income, you've got to report it unless you can dispute the amount. In Charlie Campana (T.C. Memo. 2025-23) the taxpayer failed to report a Form 1099 reporting a distribution from a qualified plan. Moreover, the taxpayer was not yet 59-1/2 and did not qualify for any of the exceptions to a penalty. The taxpayer argued that he was owed a refund from a prior year that would offset the liability. However, the Tax Court held it could not rule on the issue because it lacked jurisdiction.
Tip of the Day
Rental property lease . . . It's imperative you have a lease on any rental property--even if you're renting to your best friend. The law with respect to real property can be different so you would do well to consult an attorney for your first lease and any future ones with changes. Make sure you have a prohibition against subleasing without your express written permission. You should also prohibit a home office or business out of the home without permission. Why? Sue may use the home office for her consulting work, but Fred may by using it as for chemistry experiments. Finally, the lease should include a clause where the tenant will advise you of any planned absences of 30 days or more. A house that appears empty for too long invites squatters or other issues.
August 15, 2025
News
The IRS is warning tax professionals to remain alert to any scams and protect their client data. A common scam geared towards tax pros aims to collect their Electronic Filing Identification Numbers (EFIN). The scammer poses as a tax software provider and emails the tax pro with a request to provide their EFIN information by fax. When the tax pro faxes back their EFIN information, the scammer uses the information to steal client data and file fraudulent tax returns for refunds. Preparers who receive these emails should not respond to the email or follow the directions in the email. They should report it immediately. For more information, go to Tax Tiop 2025-57 at IRS.gov.
Tip of the Day
Home equity loans . . . Use home equity loans cautiously. Interest isn't deductible unless the proceeds are used to improve your principal residence (or the funds taken down are used in certain other ways). And the interest on only the first $750,000 of your principal amounts on your total home debt is deductible. Using home equity to pay off bills can lead to more spending. Make sure your reasons for getting the home equity loan are sound.S
August 14, 2025
News
Secretary of State can deny you a passport or revoke your current passport if you have a seriously delinquent tax debt. Generally a seriously delinquent tax debt is a federal tax liability that has been assessed, that exceeds $50,000 (adjusted for inflation), and that is unpaid and legally enforceable. In addition, the tapayer must have received certain notification and exhausted his or her rights under Sec. 6320 and the IRS certifies the debt. Drew J. Pfirrman (T.C. Memo. 2025-22) the taxpayer's debt was in excess of $59,000 at the time it was certified. The Court noted "It is uncontested that the IRS served [Mr. Pfirrman] with notice of its collection actions and his administrative rights over multiple years. [Mr. Pfirrman] took no action to timely contest the tax liens or underlying deficiency determinations. Only much later, after his passport was in jeopardy, did he attempt to dispute the IRS collection and enforcement actions. Section 7345 plainly forecloses such an eleventh-hour collateral attack on a person's underlying tax liabilities." The taxpayer also argued that he paid down the debt below the threshold. The Court noted the law requires that certification my be reversed only if the debt is fully satisfied or being paid through an installment agreement. The Court held certification of the debt was not erroneous.
Tip of the Day
Trusts . . . There are basically two types--grantor and irrevocable. A grantor trust isn't much of a trust. While title to property is transferred to the trust, you can get the property back at any time. An irrevocable trust is just that. Once the property is transferred you generally can't get it back. The same with designating beneficiaries and terms of the trust. But you can draft language that can give you some flexibility in doing these things and others. But you can't do it with a stock form. Carefully draw a list of what you want to do before visiting your attorney. And make sure you deal with an attorney who specializes in this field. Finally, before executing the trust, run it by another specialist, usually another attorney, but some CPAs specialize in trusts' tax consequences.
August 13, 2025
News
Basically all income is taxable unless there's an exclusion in the law. Arguments to the contrary have been shot down by the courts. In Paul H Christiansen and Terre Lynn Christiansen (T.C. Memo. 2025-21) the couple argued that wages and unemployment insurance were not taxable gross income because the sections of the regulations ere not approved by the Office of Management and Budget. The Court deemed the arguments frivolous and held the amounts in question were, indeed, includable in income.
Tip of the Day
Critical checklist . . . In any substantial, unusual transaction there are usually many issues you don't normally deal with. You can't make a checklist to cover all of them, but you should make a checklist of the items that are most important. That goes for both business and personal transactions. Some items you probably don't even have to list--you'll definitely remember them. For example, you're buying a new home--four bedrooms and two baths are absolutely essential. That you won't forget. But will you remember to check for 500 gallons of oil storage, underground sprinklers, age of the roof, etc. Not enough outlets in the garage? That's not a big deal, you can put them in yourself. That's not something you need on the checklist. In business situations, the checklist can be much more important because you may be signing up for things that can't be easily changed. One business owner thought his attorney would check a purchase and sale agreement for a business being acquired. As a result the allocation of the purchase price was wrong and the purchase price wasn't contingent on certain employees remaining. The buyer considered both important.
August 12, 2025
News
Even relatively small charitable contributions of property require additional information with your tax return. But donations in excess of $5,000 require a qualified appraisal. In William J. Cade and Mary E. Cade (T.C. Memo. 2025-20) the taxpayer claimed charitable contributions of some $284,000, consisting of $146,000 of personal clothing items, $89,000 for 16,300 granite cobblestones of various sizes, and $49,000 close to 10,000 pieces of commercial vinyl tile and adhesive. The attached Forms 8283 Section B Part III captioned Declaration of Appraiser was signed by various individuals apparently none of whom claimed to be qualified appraisers. The Forms 8283 were signed by the donee church pastor, but there was no printed name and the signature was illegible. Among other issues the taxpayers could not show that they attached a qualified appraisal to the return.
Tip of the Day
Report all income . . . Taxpayers sometimes ask how much do I have to make before I have to report the income. The answer is there is no threshold. Every dollar has to be reported. Some money you receive may be nontaxable--a gift from a friend (but if it's from your employer, it's probably not a gift), a rebate on a purchase (you're just getting your own money back), gas money when you're sharing expenses on a trip. But these and some others are exceptions. Another point. Don't net out an income with an expense, no matter how obvious. Report the full amount of the income received and deduct the associated expenses. There are several reasons for doing so and netting items could cause real problems if you're audited. Finally, bartering isn't like a nontaxable exchange. The item you receive is income and the value has to be reported.
August 11, 2025
News
The IRS announced (WV-2005-04) tax relief for individuals and businesses in parts of West Virginia affected by severe storms, straight-line winds, flooding, landslides, and mudslides that began on June 14, 2025. These taxpayers now have until Feb. 2, 2026, to file various federal individual and business tax returns and make tax payments. Following the disaster declaration issued by FEMA, individuals and households residing or having a business in Marion and Ohio counties qualify for tax relief. As a result, affected individuals and businesses will have until Feb. 2, 2026, to file returns and pay any taxes that were originally due during this period.
Tip of the Day
Nothing's forever . . . Or, everything changes. We were thinking about stocks and similar investments. Unless you follow the market closely, the best way to invest is research companies, buy into a good ones, and hold them. The same is true for mutual funds. But don't lock them away. Company managers change, markets change, technology changes, etc. That's particularly true today. With mutual funds it's often the managers. Twenty-five years ago one fund was had an unbeatable track record. Some time later the manager retired and with in, years the fund was underperforming the market.
August 8, 2025
News
The IRS announced (TX-2025-04) that it has added the counties of Edwards, Lampasas, Real, Reeves, Schleicher, and Sutton to those that qualify for tax relief for individuals and businesses in parts of Texas affected by severe storms, straight-line winds. and flooding that began on July 2, 2025. These taxpayers now have until Feb. 2, 2026, to file various federal individual and business tax returns and make tax payments. The complete list of counties that qualify for relief now includes Burnet, Coke, Concho, Edwards, Hamilton, Kendall, Kerr, Kimble, Lampasas, Llano, Mason, McCulloch, Menard, Real, Reeves, San Saba, Schleicher, Sutton, Tom Green, Travis, and Williamson. For more information, click on the link above.The IRS announced (IR-2025-52) that, as part of its phased implementation of the One Big Beautiful Bill Act, there will be no changes to certain information returns or withholding tables for Tax Year 2025 related to the new law. Key points for TY 2025 relating to OBBBA provisions:
These decisions are intended to avoid disruptions during the tax filing season and to give the IRS, business and tax professionals enough time to implement the changes effectively. For more information visit, One Big Beautiful Bill Act of 2025 Provisions.
Tip of the Day
End of meeting summary . . . Meetings can be extremely productive or a total waste of time. The outcome depends heavily on planning and control of the session. One thing you shouldn't forget is a quick summary of the most important points of agreement and a recitation of what each participant is supposed to follow up on. For short meetings that can be done verbally just before the group breaks up. For long meetings consider a written "to do" list for each participant.
August 7, 2025
News
REG-132805-17 contains proposed regulations that would provide guidance regarding an employer's line or lines of business for purposes of determining the exclusion from gross income for no-additional-cost services or qualified employee discounts provided to employees. These proposed regulations would replace a business classification system that has not been updated since 1974 with a much more current classification system that is updated every five years. Under these proposed regulations, the application of the no-additional-cost benefit and employee discount exclusions from employee income under Section 132(a)(1) and (2) would be determined under a classification system that more accurately reflects current economic activity than the system used under the existing regulations, thereby reducing burden in applying the exclusions from income under Section 132(a)(1) and (2).https://assets.msn.com/staticsb/statics/latest/fluent-icons/caret_left_24_filled.svgTip of the Day
Guaranteeing a loan? . . . Unless it's required for a business in which you're the sole or principal owner, it's almost always a no win situation. First, why obligate yourself to pay off a debt where you will get no benefit? Even if there is a benefit, in most cases it's small compared to the risk. And it is a big risk. If the lender asks for a guarantee, in most cases he doesn't think much of the primary obligor. And, if the primary obligor doesn't pay, the lender will quickly come after you. Second, you'll get no tax deduction for the interest on any payments unless the primary obligor actually defaults. He could be in a terrible financial situation, but if you make the payments with the purpose of keeping him afloat, you'll still get no deduction. And that assumes that the tax law would allow a deduction for the interest if you otherwise qualify. For example, you guarantee your brother-in-law's car loan. He defaults and you pay the interest. That's personal interest and would not be deductible. Third, in some situations you may leave yourself open to more than the original obligation when the loan is open-ended. Finally, if you look for credit a lender who's looking at your credt score will add the amount guaranteed to your debt load.
August 6, 2025
News
Many tax shelters rely on complying with the letter of the law but lack economic substance. That is, they create losses where the participant doesn't suffer any economic hardship. The IRS can disallow the losses based on the lack of economic substance. That was the case in Scott A. Blum and Audreyh R. Blum (T.C. Memo. 2025-18) but here the taxpayers argued that they had not received proper notice. The Court noted that The Treasury regulations 1 explicitly and clearly state the requirements for partnerships and their partners to update names and addresses of the partners as well as the IRS's obligations when mailing a notice of Final Partnership Administrative Adjustment (FPAA). The taxpayers did not adhere to the regulations; the IRS did. The taxpayers did not properly identify Scott Blum as an indirect partner in the TEFRA partnership or update the address for sending the FPAA with respect to his partnership interest. The Court rejected the taxpayers' arguments.
Tip of the Day
Deposits to wrong account . . . One business owner delegated check deposits to an employee of 10 years. The employee deposited almost an entire months' checks into someone else's account. We're not sure how this was accomplished, but there's an easy way to prevent it--check your account regularly. If you only make deposits once a week, you should check after each deposit. In the old days you had to wait a month for your statement. Now there's no excuse, it only takes a minute or two. In most cases deposits show up in less than an hour after a deposit. In most cases you can also get an email or text notice of the deposit. The person checking should not be the person making the deposit. Reconciling the bank account at the end of a month will often catch most errors.
August 5, 2025
News
The Federal Trade Commission is warning that scammers are still pretending to be the police, calling to say you've missed jury duty and need to pay. But in a new twist, some scammers are now telling you to visit a website to enter your personal information--all so they can steal it and your money. It starts with a call that sounds like it's from an officer in your local police department. (It's not.) They claim you missed jury duty (you probably didn't) and will be arrested unless you visit a website to pay a fine (still no). They send you to a site that looks legitimate, with an official-sounding URL and government-looking seals (all fake). It'll ask you to enter your birthdate and Social Security number to "look up how much you owe." It might ask you to pay up to $10,000 in fines on the site, or send you to a "government kiosk" (no such thing) to pay by cryptocurrency. But every bit of this is a scam. For more information, click on the link above.The Financial Crimes Enforcement Network (FinCEN) issued a Notice urging financial institutions to be vigilant in identifying and reporting suspicious activity involving convertible virtual currency (CVC) kiosks. While CVC kiosks can be a simple and convenient way for consumers to access CVC, they are also exploited by illicit actors, including scammers. The risk of illicit activity is exacerbated if CVC kiosk operators fail to meet their obligations under the Bank Secrecy Act (BSA). Click on the link for more information.
Tip of the Day
Not every solution need be high tech . . . There's no question that computers have made most work easier. But there are times when a low tech solution is easier and faster. If you're doing some computations only once and they're not that complicated, grab the calculator and a pencil rather than opening a spreadsheet. You can use a computer to schedule multiple processes in a small job, but you can almost assuredly do it quicker with paper and pencil or a whiteboard. There are other examples. Got a dozen nails to drive? You could use a nail gun, but by the time you move the compressor and drag the hose the job would be long done if you used a hammer.
August 4, 2025
News
You may be able to avoid paying the full amount of a tax liability with an offer-in-compromise or other collection alternative. In Richard L. Brown and Camille C. Brown (T.C. Memo. 2025-17) the taxpayers sold real property used as an early childhood education facility that resulted in a substantial tax liability. They bought replacement property but failed to qualify for a like-kind exchange. In a collection due process hearing the denied an offer-in-compromise. THe taxpayers claimed a lien would cause the them significant financial hardship. On Form 656 they checked the box for Effective Tax Administration and for "The amount offered is based on my exceptional circumstances other than economic hardship." They did not check the box for "Paying more than the amount offered would create a financial hardship." The offered $75,000 to settle their some $600,000 liability. The IRS rejected the offer. The two-page memo explaining the rejection indicated that the case did not meet criteria for effective tax administration on grounds other than economic hardship. The Tax Court found for the IRS.Tip of the Day
Buying property from estate . . . If you inherit property from an estate your basis is equal to the fair market value at the date of the decedent's death. But what if you purchase property from the estate at a bargain price? Your basis would be what you pay for the property. In one case a nephew who took care of the decedent for a number of years was allowed, by the terms of the will, to purchase a parcel of real estate for $200,000 regardless of the the market value. Other heirs received property and/or cash. As it turned out, the fair market value at the date of death was $950,000. The court held the taxpayer's basis was his purchase price.
August 1, 2025
News
The IRS is reminding taxpayers that social media can be a resource for up-to-date tax information, especially with the many changes to the federal taxes in 2025. However, taxpayers should be mindful of what accounts they're following for tax advice. Unfortunately, there's a lot of inaccurate or scam advice being shared. Which is why it's important that taxpayer get tax-related information from IRS verified social media account or e-news services. Visit IRS.gov to get direct links to IRS verified social media accounts. IRS has accounts on:
The IRS never contacts taxpayers on social media to ask for their personal or financial information. Taxpayers should be aware scammers may pose as the IRS to steal a taxpayer's identity or defraud them. To stay informed, be sure to follow, like and subscribe.
Tip of the Day
Business mwals . . . Business meals are only 50% deductible. But that's not the only limitation. The law contains a prohibition lavish meals--but doesn't define lavish. We've never seen a court case on the issue, but you don't want to be the one to test it. You should be able to defend the bill based on the circumstances. One issue that has been tested in court is "reciprocal" meals. In a case a group of businessmen from the same firm took turns taking the others out to lunch. Fred would take four of his colleagues on Monday, John's turn to take the group out would be Tuesday, etc. They got caught in part because the pattern was so blatant.
July 31, 2025
News
Investing in a business? You can't deduct the losses or the expenses if you don't have an ownership interest. . In Heather Weston; Stewart Weston (T.C. Memo. 2025-16) invested in a home rehab business. But he did not have a formal ownership interest in the business. As it turned out the taxpayers were scammed out of their funds through the incompetentence of the man who was in charge of buying, renovating, and selling the properties. The Court held that the taxpayers did not show that the operator of the business stole the funds nor did the taxpayers discover the theft, if there was one, in the year the loss was claimed, nor was there no reasonable prospect of recovery in the year the loss was claimed.
Tip of the Day
Charitable contributions by business . . . It's not unusual for business owners to make charitable contributions through their business. If you do business as an S corporation, LLC, partnership, etc. the contribution isn't deductible by the business but passed through to the shareholders, partners, etc. That's fine if the shareholder, etc. can use it. But if your young children (or other owners) hold shares or other interests in the company they might not be able to utilize the deduction. Interest, dividends, rental income, capital gains and losses, and a number of other items are passed through to the partners or shareholders. Talk to your tax advisor to determine what's best for your business.
July 30, 2025
News
Notice 2025-26 provides interim guidance to reduce the compliance burdens and costs associated with applying the corporate alternative minimum tax (CAMT) to partnerships and CAMT entity partners. The Department of the Treasury and the IRS intend to partially withdraw the CAMT proposed regulations (as defined in section 2.03 of this notice) and to issue revised proposed regulations, in part, to include rules similar to the interim guidance provided in sections 3 through 7 of this notice regarding the application of Secs. 56A(c)(2)(D) and 56A(c)(15)(B) of the Code to partnership investments (forthcoming proposed regulations).1 Taxpayers may rely on the interim guidance provided in sections 3 through 7 of this notice as described in section 9 of this notice. Section 8 of this notice modifies the reliance rules provided in the CAMT proposed regulations.
Tip of the Day
Hurricane season is here . . . And that's not the only type of storm that can result in heavy property damage. There are a couple of simple things you can do to minimize the cost of such storms. First, make sure you're adequately insured with a financially secure insurer. Not all insurance companies have the reserves or buy enough reinsurance to cover all the claims. Be wary of small compamies, even ones that have good ratings. A good rating may be adequate for small storms, but much less so with a strong hurricane or one that covers a large area. And small companies often concentrate in a small geographic area, increasing their risk. Second, do some preplanning and check out contractors who are insured, licensed, and if necessary bonded. Disasters almost always bring out a number of unscrupulous contractors. When the storm hits you want to be able to contact someone as quickly as you can. Third, you can take some steps to mitigate the effects of the damage. If you have a sump pump or a lot of frozen foods, consider a generator. Same if you're up north, but to run the heat and prevent the pipes from bursting. Buy enough tarp to cover your roof. It would be sad to see the house survive but extensive water damage because a tree fell on it. Tarp to cover the whole roof shouldn't break the bank.
July 29, 2025
News
The IRS has attacked conservation easements because there are multiple requirements to secure the deduction and the amount of tax dollars involved are significant. In Green Valley Investors, LLC, et al., Bobby A. Branch, Tax Matters Partner (T.C. Memo. 2025-15) the Court held the easement deed did not contain the required language providing for the transfer in perpetuity and sustained the IRS's disallowance. In addition, the appraisal based highest and best use. The taxpayers claimed that use was as a quarry for stone construction aggregate. The IRS rebutted the presumption noting substantial competition in the market and the price of comparable properties. The Court rejected the highest and best use of the property as mining property finding that use to not be financially feasible and valued the acerage using comparable sales.
Tip of the Day
Tapping the 401(k)? . . . Or the IRA, SEP or any other pension plan? There are very few times when that makes sense. First, even if you're in a low tax bracket, the federal and state taxes and the early withdrawal penalty (if you're less than age 59-1/2) can easily take 30% of the withdrawal and it's higher if you're in the 22% or higher bracket. Second, chances are you'll never return that money to plan. Even if you want to it can be hard because of contribution restrictions. When does it make "sense" to tap the account? For a true, unscheduled emergency such as medical, natural catastrophe, etc. In these situations you might be able to take a loan from the plan rather than a withdrawal.
July 28, 2025
News
The IRS issued a memorandum highlighting changes aimed at reducing case cycle times for corporate taxpayers, making examinations more customer-driven, consistent and efficient. The Interim Guidance Memorandum (IGM), Reinforcing the Customer Focused, High Efficiency Large Business & International Examination Process, fosters a culture of collaboration with taxpayers to resolve issues. These changes are intended to enhance taxpayer service and tax administration by streamlining examination resources, facilitating timely issue resolution, and expediting tax certainty. For more information, click on the link above.The IRS has released Tax Tip 2025-50 to help tax professionals protect client information. Tax professionals are required by law to create a Written Information Security Plan--or WISP--to protect their clients' data. The IRS and the Security Summit partners have created an easy-to-follow guide that outlines the basics and walks tax professionals through the ins and outs of starting and maintaining a plan.
Tip of the Day
Want to be a whistleblower? . . . Turn in your company or boss or that annoying rich neighbor? Before you do make sure you've got the necessary goods. The IRS doesn't just pay the reward for a great tip. The service must investigate the info and it must lead to an examination and collection from the target. The award is based on the amount collected. If you're involved in the underpayment the award can be reduced or denied. Be aware that if the IRS decides not to pursue the information there will be no reward. And, while the identity of the whistleblower is confidential, in many cases the target is likely to find the identity of the whistleblower. Finally, be aware that you're signing the allegations under the penalty of perjury.
July 25, 2025
News
The IRS is reminding (FS-2025-04) Business Tax Account (BTA) users that Designated Officials must revalidate their accounts by the July 29 deadline in order to maintain access. Designated Officials who do not revalidate their accounts by July 29, 2025, will need to request access to the account again, either as a Designated Official or other user type. Revalidation requires a W-2 for the most recent tax filing year or proof that they can legally bind an entity for tax purposes. To revalidate, Designated Officials must log in to their BTA account.Revenue Procedure 2025-25 provides indexing adjustments to the applicable percentage table (Applicable Percentage Table) in Sec. 36B(b)(3)(A)(i) of the Code for taxable years beginning in calendar year 2026. This table is used to calculate an individual’s premium tax credit under Sec. 36B. This revenue procedure also provides the indexing adjustment for the required contribution percentage (Required Contribution Percentage) in Sec. 36B(c)(2)(C)(i)(II) for plan years beginning in calendar year 2026. This percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under Sec. 36B.
Tip of the Day
How to fund your IRA . . . Every so often advisors and taxpayers come up with an idea of putting a non-traditional asset into an IRA or self-managed pension plan. That's often a bad idea. For example, putting a rental property in an IRA. First, should the property not generate sufficient cash to pay expenses or capital requirements such as a new roof, you can't make a contribution to the IRA to do so. You may have other options but you've got to be careful. Second, when distributions are made from any qualified plan, they're all ordinary income. Most rental properties generate a substaintial portion of the total return is from selling the property which creates, at least in part, long-term capital gain. But not in an IRA or other plan. That gain will be ordinary income. Third, should you want to take a distribution out of the IRA with a property, you might have to sell the property unless you can take the distribution from other assets in the plan. Finally, an IRA is a tax deferral vehicle. The idea is to defer the income to retirement when, presumably, you'll be in a lower bracket. But many rental properties do that by their nature.
July 24, 2025
News
Revenue Procedure 2025-26 provides indexing adjustments for the applicable dollar amounts under Sec. 4980H(c)(1) and (b)(1) of the Internal Revenue Code. These indexed amounts are used to calculate the employer shared responsibility payments (ESRP) under Sec. 4980H(a) and (b)(1), respectively. For calendar 2026 the adjusted $2,000 amount is $3,340 and the adjusted $3,000 amount is $5,010.
Tip of the Day
Accounting for business assets . . . Whether you expense business assets under Sec. 179 or depreciate them over a number of years, if you're audited by the IRS there's a good chance you'll have to show the details surrounding the acquisition such as an invoice, costs to install (if appropriate), etc. You may also have to show details of any disposition or be able to show you still own the asset. The higher the asset's value, the greater the chance documentation may be requested. Ideally each asset of significance should be tracked and a file kept. That may also be required for accounting purposes. It's also a good way to check on assets from time to time to make sure they don't grow "legs".
July 23, 2025
News
The Treasury Inspector General for Tax Administration (TIGTA) performed a review to update a previous report on the IRS's efforts to reduce its workforce. This report provides a snapshot of IRS business units and positions impacted, as of May 2025. Of approximately 103,000 in February 2025, some 25,500 have been fired or took deferred resignation, leaving about 77,428 estimated employees. The number of tax examiners are down by 27% and revenue agents by 26%. Contact representatives are down by 23% and IT management by 23%. Similar losses were reported in most job functions. For the full report, go to www.tigta.gov/sites/default/files/reports/2025-07/2025ier027fr.pdf.
Tip of the Day
Scammers know your weak points . . . Whether it's old school telemarketing calls or higher tech email schemes, the sign of a good con artist is knowing your weakness. Would you like a free medic alert device? What to wipe out your credit card debt? Settle your IRS debt for pennies on the dollar? Earn 20 percent a year on your money? There's a common theme here. Your only defense is to be skeptical, no matter how hard that is. But the old adage can work for you. If it seems to good to be true, it probably is (too good to be true).
July 22, 2025
News
REG-125710-18 withdraws two notices of proposed rulemaking containing proposed regulations on the treatment of built-in items of income, gain, deduction, and loss taken into account by a loss corporation after an ownership change. The proposed regulations would have affected corporations that experience an ownership change under Section 382(h) of the Code.The Treasury Inspector General for Tax Administration (TIGTA) conducted an audit to provide various statistical information regarding Collection and Examination function activities as they relate to the IRS's efforts to bring taxpayers into compliance with their tax obligations. This is annual function. With funding from the Inflation Redution Act the IRS stemmed the decline in examination staff. In Fiscal Year 2023 each field examination employee produced an average of $3.4 million in proposed adjustments. In That reversed in early 2025 with cuts by the Trump administration. (The audit covered through fiscal year 2024.) To see the full report, go to www.tigta.gov/sites/default/files/reports/2025-07/2025300031fr.pdf.
Tip of the Day
Don't wait to take action . . . You should be continually monitoring your business. While there are many metrics available to measure business performance, often just a few will be all that's needed to get a good handle on your business. For example, year-to-year sales comparisons and profit margin trend are likely to be early tipoffs that something is amiss. Other metrics such as inventory turnover, may be confirming indicators and can pinpoint problem areas. But once you have early signs of a problem you should investigate further and, if action is warranted, do so quickly. More than one business has run into major problems or failed because management didn't act quickly enough. Turning around a business that's been on the decline for a while requires more drastic solutions. Now, instead of a hiring freeze you may have to lay off employees. The longer you wait, the less options you may have. Don't act rashly, but don't procrastinate.
July 21, 2025
News
You might be able to offset a curent tax liability by a pending tax credit. That was the situation in Peoplease, LLC (T.C. Memo. 2025-14). The taxpayer expected a an Employee Retention Tax Credit based on a claim filed. At a CDP (collection due process) hearing the taxpayer advanced the argument that credit would offset the liability. The IRS requested additional information before agreeing, but the taxpayer failed to provide that. The Court noted a mere claim of an overpayment is not an available credit and thus cannot be taken into account in a CDP hearing to determine whether the underlying tax in issue remains unpaid. The only issue the Court can decide here is whether or not the IRS abused its discretion when rejecting the taxpayer's argument. The taxpayer did not request a collection alternative at the CDP hearing but brought it up at trial. The Court noted it could not rule on an issue not brought up at the CDP hearing. The Court sustained the IRS's action.
Tip of the Day
Buying a car? . . . There's a reason car salesman have a bad rep. And it's not all their fault. It's part of the system. There are a lot of ways other than the actual price of the car a dealer can make money. He can make it on the financing, on a warranty, on options, etc. The biggest mistake you might make is to tell the salesman how much you're willing to spend, especially if it's a monthly number. With that number he can work backwards to add options yet keep the price the same by lengthening the loan, changing the down payment, etc. Don't divulge what you can pay. And, if you can, take someone with you who will look at the deal objectively. For most people a car is both a necessity and an impulse purchase. Avoid temptation.
July 18, 2025
News
The IRS announced (NM-2025-03) tax relief for individuals and businesses in parts of New Mexico affected by severe storms, flooding, and landslides that began on June 23, 2025. These taxpayers now have until Feb. 2, 2026, to file various federal individual and business tax returns and make tax payments. Following the disaster declaration issued by the FEMA, individuals and households residing or having a business in Chaves, Lincoln, Otero, and Valencia counties qualify for tax relief. As a result, affected individuals and businesses will have until Feb. 2, 2026, to file returns and pay any taxes that were originally due during this period. Click on the link above for more information.
Tip of the Day
Deducting warranty expense . . . If you purchase an extended warranty for an auto used for business purposes, you can't deduct the full amount in the year of purchase. You've got to amortize the cost of the life of the warranty. Take the full cost and divide by the number of months in the warranty period. Multiply the number of months the warranty was in effect for the year by the monthly amount. For example, if you purchased the warranty September 1, 2025, deduct 4 months of the cost in 2025, 12 months in 2026, etc. If the auto isn't used 100% for business, you can only deduct the portion that applies to the business.
July 17, 2025
News
Revenue Ruling 2025-15 provides guidance on withholding and reporting issues relating to uncashed qualified retirement plan distribution checks and replacement checks.The IRS is warning (IR-2025-75) tax professionals to be wary of evolving phishing emails and other schemes to steal sensitive taxpayer data and offer steps tax pros can take to protect sensitive taxpayer information. This is the second in the five-part series. These security tips will be a key focus of the Nationwide Tax Forum this summer. In addition to the series of five news releases, the tax professional security component will be featured at the forums, which are three-day continuing education events. The online article mentions phishing/smishing, spear phishing, clone phishing, whaling, and new client scam. Click on the link above for more information and links to other resources.
Tip of the Day
Short-term rentals . . . Renting out your house or vacation home for a short time period such as weekly. That type of rental may not fall under the same rules as renting a home for longer periods such as a month or more. In many states such short-term rentals are subject to sales tax or "meals and rooms" tax which can be higher than the usual sales tax. You don't have to be a registered business to be required to collect and pay the tax. Check the rules for your state.
July 16, 2025
News
What constitutes self-employment income? Most of the time it's obvious. You do consulting for several businesses or you test products out of your home for a business. But sometimes you run into a gray area, at least as far as you're concerned. In James Clark (T.C. Memo. 2025-13) the taxpayer reported income from freelance writing and selling movie memorabilia as "other income" on his return, not subject to the self-employment tax. The taxpayer received some $8,000 from writing and $42,000 (gross) from selling movie memorabilia. The IRS claimed all the income was subject to the self-employment tax. It assessed additional tax and penalties (by the automated underreporter system, AUR). The taxpayer claimed he was not liable for the additional tax because the IRS conceded the issue, offering a letter from the Social Security Administration (which administers the self-employment tax) that he did not owe the tax. The Court found the taxpayer liable for the additional tax and penalty, noting that the refund he received was similarly in no way a concession on the IRS's part. Rather, the refund was issued to bring petitioner's IRS account into the proper status given the instant litigation, i.e., to reflect the effects of the delayed litigation hold, including the IRS's reversing the premature assessment.
Tip of the Day
Renegotiating a lease . . . If you rent retail space for your business you may have the upper hand in many regions of the country. More than a few retailers have announced closing a large number of stores and several have gone out of business entirely. In addition, a number of casual dining chains have closed locations. While some malls in attractive locations have limited vacancy, smaller malls, strip centers, less visible centers, etc. may have higher vacancies. If you lease is coming up for renewal or you're looking for space you may be able to take a hard line on negotiations. That might include more allowances for alterations, lower rent, a free rent period, etc. Because the situation could continue to deteriorate, you should have an option to get out of any long-term leases early. What about current leases? You may be able to renegotiate and gain some concessions. That's particularly true if you have a strong position, such as being a major draw for the center. Get good advice and have a real estate attorney review your lease.
July 15, 2025
News
The Senate has passed the Filing Relief for Natural Disasters Act which would increase the mandatory period that the IRS must delay filing requirements for those involved in a disaster declaration from the current 60 to 120 days. The bill would also broaden the defintion of a qualified state declared disaster.
The IRS has announced that Tax Year 2026/Filing Season 2027 is the target date for the retirement of the Filing Information Returns Electronic (FIRE) system. FIRE will not be available for submissions in Filing Season 2027. The Information Returns Intake System (IRIS) will be the only intake system for information returns currently received through FIRE. The IRS is encouraging users to complete a IRIS Application for TCC and begin transitioning to IRIS to ensure you are ready for the 2027 filing season. IRIS Working Group meetings are held the second Wednesday of every month. Attendees must register each month to receive the meeting link. Working group notifications are sent out to subscribers of Information Returns Intake System (IRIS) QuickAlerts. Attendees can also complete the registration on the IRIS working group meetings and notes page located on irs.gov/IRIS. Tip of the Day July 14, 2025 News
Tip of the Day July 11, 2025 News
Tip of the Day July 10, 2025 News
The IRS notes, however, payments for returns on a filing extension are not eligible for additional time to pay as filing extensions only apply to the filing of the return and not to payments.
Tip of the Day July 9, 2025 News
Tip of the Day July 8, 2025 News
Tip of the Day July 7, 2025 News
JM Assets, LP, A-A-A Storage, LLC, Partnership Representative (165 T.C. No. 1) was a partnership subject to the audit and litigation procedures of Section 6221 Under those procedures, at the conclusion of the examination of a partnership return, the IRS calculate5 an imputed underpayment. Within 270 days of notification of the amount of a proposed imputed underpayment, a partnership may submit a request for modification of that amount. In the case of any modification, the period within which the IRS may make a final partnership adjustment remains open for at least 270 days "after the date on which everything required to be submitted--is so submitted." I.R.C. §6235(a). Reg. Sec. 301.6235-1(b)(2)(A) defines "the date on which everything required to be submitted--is so submitted" to be the date the period during which a partnership may request modification ends. On June 9, 2022, the IRS notified the taxpayer of the amount of an imputed underpayment. The partnership submitted everything required to be submitted for a modification request 250 days later, on February 14, 2023. The IRS made an adjustment 290 days after the taxpayer's request, on December 1, 2023. Before the Court were cross-motions disputing whether the IRS's adjustment was timely. The taxpayer argued that the period for adjustment expired 270 days after it submitted its modification request. Relying on his regulation, the IRS argued that the period for adjustment did not expire until 270 days after the close of the period during which the taxpayer could request modification. The Court held that when a regulation attempts to change an unambiguous provision of a statute, the regulation falls outside the boundaries of any rulemaking authority that Congress may have delegated. The Court also held the extended period of limitations for a substantial omission of income under Section 6235(c)(2) does not apply when the taxpayer adequately discloses the nature and amount of the omitted income. Finally, the Court also held the partnership adequately disclosed the nature and amount of the income R asserts was omitted and that the Notice of Final Partnership Adjustment was untimely.
Tip of the Day July 3, 2025 News
Tip of the Day July 2, 2025 News
The IRS gives no quarter when it comes to employment taxes. An employer is just collecting them for the government. Any individual who has the authority to pay them and pays other creditors ahead can be liable for the taxes--and often is. Often it's the CEO/owner/sole shareholder, but not always. In Joseph L. Warnement, Plaintiff (U.S. Court of Federal Claims) the IRS claimed the Plaintiff was responsible for paying the taxes. The Plaintiff had been hired as a consultant to run the company but did not have the authority to make the payments. He was able to show that he did not have the authority to pay the taxes, nor did he have the authority to sign checks and that he was not officially the CEO until he signed an employment agreement. The Court sided with the Plaintiff in part and with the IRS in part.
Tip of the Day July 1, 2025 News
Tip of the Day
Copyright 2025 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536
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