The case of Thermal Circuits, Inc. v. Commissioner, T.C. Memo. 2026-29, centers on a manufacturing corporation that received substantial funds from a customer to expand its production capacity. Thermal Circuits, Inc. (Thermal), an accrual-method C corporation, manufactures foil heating components. In 2013, Nicoventures Trading Limited (NVT), a subsidiary of British American Tobacco, engaged Thermal to produce foil heating elements for electronic tobacco devices.

By 2016, NVT’s demand for the heaters significantly outpaced Thermal’s production capacity. NVT desired nearly 20 times the output without an increase in the $10 per-unit cost. To meet this volume at a fixed cost, Thermal needed a larger facility and more equipment. NVT ultimately agreed to fund an expansion of Thermal's leased manufacturing facility. In 2017, NVT paid $4.085 million toward the leasehold addition, followed by an additional $204,529 in 2018. Throughout construction, Thermal purchased necessary tools and machinery to populate the addition, billing NVT on a cost-plus basis. Once completed, Thermal paid the insurance and property taxes for the entire premises, including the new addition, and bore all attendant risks.

Barrett Business Services, Inc. ("Barrett") operates as a professional employer organization (PEO) and is not a certified PEO pursuant to I.R.C. § 7705. The company provides employment-related services to small and mid-sized businesses across the United States. Barrett's standard services for its clients—the "worksite employers"—include onboarding worksite employees into its payroll system, processing and paying wages, and handling the withholding, payment, and reporting of all applicable federal, state, and local employment taxes. Critically, while Barrett manages human resources and payroll functions, "Barrett does not supervise the day-to-day activities of the worksite employees". Instead, the worksite employers direct and supervise the employees' day-to-day activities at the clients' respective sites.

For the tax years 2017 through 2020, Barrett claimed the Work Opportunity Tax Credit (WOTC) under I.R.C. § 51 and the Empowerment Zone Employment Credit (EZEC) under I.R.C. § 1396 on its corporate returns for qualifying worksite employees. The Commissioner issued a Notice of Deficiency to Barrett, disallowing the claimed WOTC and EZEC on the grounds that Barrett was not a common law employer of the worksite employees.

On March 25, 2026, the House Ways and Means Committee unanimously approved a slate of five bipartisan bills aimed at delivering targeted tax relief to vulnerable populations and modernizing Internal Revenue Service (IRS) operations. For CPAs and Enrolled Agents, this legislative package introduces critical modifications to the Internal Revenue Code and IRS procedures that will directly impact tax planning and controversy representation. The proposed statutory changes address the tax-free treatment of legal settlements for sexual assault survivors (H.R. 2347), extend generous casualty loss rules and exclusions for disaster and wildfire victims (H.R. 5366), and expand the above-the-line educator expense deduction to include early childhood teachers (H.R. 5334). Furthermore, the package includes critical operational reforms that mandate a more taxpayer-friendly IRS through sweeping customer service and online account upgrades (H.R. 7971), while simultaneously strengthening protections, anonymity, and evidentiary standards for tax whistleblowers (H.R. 7959). The following article provides a detailed, code-level analysis of how each of these five bills proposes to alter the existing tax landscape for practitioners and their clients.

In the recent Memorandum Opinion Tibor Gyarmati v. Commissioner of Internal Revenue, T.C. Memo. 2026-27, the United States Tax Court addressed fundamental principles regarding the substantiation of basis in real property, the allocation of sale proceeds to personal property, and the assessment of additions to tax for unfiled returns. The case highlights a critical area of tax practice: the rigid documentation requirements taxpayers face when attempting to offset capital gains through alleged basis increases and purchase price allocations. For CPAs and Enrolled Agents, the ruling serves as a stark reminder of the limitations of the Cohan rule when a taxpayer’s records are fundamentally deficient and their testimony lacks credibility.

The case of Hancock County Land Acquisitions, LLC v. Commissioner, T.C. Memo. 2026-28, centers on a syndicated conservation easement (SCE) transaction over a 236-acre parcel of land located in Hancock County, Mississippi, within a buffer zone surrounding the John C. Stennis Space Center. The subject property was carved out of a 1,698-acre parent tract that had been bought and sold multiple times between 2003 and 2013. The transactions involving the parent tract established historical pricing between $895 and $7,479 per acre. In March 2015, the entity WMAH, which was solely owned by Shale Support Holdings, LLC, held the undeveloped 236-acre subject property.

This case (Jackson Crossroads LLC v. Commissioner, CA11, No. 25-10744, No. 25-10745, March 25, 2026) involves two consolidated entities subject to the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA): Jackson Crossroads, LLC and Long Branch Investments, LLC. In late 2015, real estate professionals Russell Bennett and Carlton Walstad, acting through Mor-Ton, LLC, purchased two adjoining parcels of land totaling approximately 925 acres in Walton and Morgan Counties, Georgia, for $5.2 million. A contemporaneous third-party bank appraisal confirmed the collective value of the properties at the $5.2 million purchase price.

For tax professionals representing partnerships in complex examinations, particularly those involving syndicated conservation easements under the centralized partnership audit regime (BBA), the procedural safeguards surrounding the statute of limitations are paramount. The recent stipulated decision in Agate Holdings, LLC v. Commissioner, Docket No. 1464-24, provides a critical examination of the final partnership adjustment (FPA) limitations period under I.R.C. § 6235, the mechanics of modification period extensions via Form 8984, and the high evidentiary burden the IRS faces when attempting to assert the civil fraud penalty under I.R.C. § 6663 to keep an expired assessment statute open.

In Smith v. Commissioner, T.C. Memo. 2026-25, the Tax Court reviewed the 2022 individual income tax return of Michael Smith. During the 2022 tax year, Mr. Smith held jobs with two separate employers, receiving wages totaling $16,535, which he appropriately reported on his Form 1040. However, claiming a disabling injury, Mr. Smith applied for Social Security Disability Insurance (SSDI) benefits in April 2022.

In November 2022, the Social Security Administration (SSA) issued an award letter granting retroactive benefits, and Mr. Smith subsequently received SSDI payments spanning from March 2022 through March 2023. In total, the SSA paid Mr. Smith $26,802 in SSDI benefits during the 2022 tax year, which the agency reported to the IRS on Form SSA-1099. Mr. Smith did not report any of these benefits on his 2022 Form 1040.

In April 2023, the SSA ceased making disability payments after discovering Mr. Smith had been employed since April 2022. The SSA informed him that he "should have never been entitled to receive [a] Social Security disability benefit". Consequently, Mr. Smith was required to reimburse the SSA. He repaid $31,116 in May 2023 and fulfilled the remaining balance via monthly payments across 2023 and 2024. Upon examining his 2022 return, the IRS determined that 85% of the 2022 SSDI benefits ($22,782) should have been included in his gross income pursuant to IRC Sec. 86(a), resulting in a tax deficiency of $5,454.

In a reviewed opinion that holds significant implications for partnerships subject to the centralized partnership audit regime, the United States Tax Court recently issued its decision in Jones Bluff, LLC v. Commissioner, 166 T.C. No. 6 (2026). At the heart of the litigation was whether a partnership possesses the legal standing to assert the Fifth Amendment due process rights of its individual members to invalidate a Notice of Final Partnership Adjustment (FPA).

The Department of the Treasury and the Internal Revenue Service recently issued final regulations (TD 10043) that amend the substantiation requirements under Section 274 of the Internal Revenue Code (IRC). Aimed primarily at governmental units and emergency responders, these regulations expand the definition of qualified nonpersonal use vehicles to include unmarked vehicles used by firefighters, rescue squads, and ambulance crews. For tax professionals, understanding the interaction between the statutory framework, the prior regulations, and these new modifications is critical for advising municipal clients and individual first responders on working condition fringe benefit exclusions and substantiation relief.

The administration and subsequent enforcement of the Employee Retention Credit (ERC) under 26 U.S.C. § 3134 has generated a wave of compliance challenges, processing delays, and subsequent litigation. For tax professionals advising clients on payroll tax refund claims, the recent unpublished memorandum decision from the Ninth Circuit Court of Appeals in ERC Today, LLC v. McInelly, No. 25-2642 (9th Cir. Mar. 17, 2026) offers critical insights into how the federal judiciary views standing and procedural challenges brought by third-party tax preparation firms against the Internal Revenue Service.

For tax professionals advising clients on the business interest deduction limitation, Revenue Procedure 2026-17 offers crucial administrative relief. Following the sweeping legislative changes introduced by the One, Big, Beautiful Bill Act (OBBBA), this procedure permits eligible taxpayers to withdraw previously irrevocable IRC § 163(j)(7) and § 1.163(j)-1(b)(15)(iii) elections. By doing so, taxpayers can capitalize on newly restored adjusted taxable income (ATI) add-backs and permanent 100 percent bonus depreciation. Below is a detailed technical review of the reasons for the procedure’s issuance, the IRS’s analysis of the law, the specific requirements for obtaining relief, and the mechanical procedures required for implementation.

For tax professionals managing clients with digital asset portfolios, the regulatory framework governing basis tracking has seen recent critical updates. Under IRC § 1012(c)(1), "in the case of the sale, exchange, or other disposition of a specified security on or after the applicable date, the conventions prescribed by regulations under that section must be applied on an account-by-account basis". To that end, final regulations issued in T.D. 10000 established ordering rules for determining which units of a digital asset are treated as sold when a taxpayer holds multiple units acquired at different times or prices.

For tax professionals advising clients on the deductibility of losses stemming from defunct investments and complex litigation, the Sixth Circuit’s recent unpublished opinion in Michael H. Shaut v. Commissioner, No. 25-1568, CA6 (March 12, 2026) serves as a critical reminder of the strict evidentiary burdens placed on taxpayers. In affirming the United States Tax Court’s decision, the appellate panel addressed the substantiation requirements for ordinary and necessary business expenses under Internal Revenue Code (IRC) § 162, theft losses under IRC § 165, and net operating loss (NOL) carryovers under IRC § 172.

For those representing corporate taxpayers, ensuring that a client’s corporate status is active and in good standing is a fundamental prerequisite before engaging in federal tax litigation. The United States Tax Court recently underscored this critical principle in Arbor Vita Corporation d.b.a. Hemediagnostics v. Commissioner, 166 T.C. No. 5 (March 16, 2026). In this opinion, Judge Landy addressed the interplay between state corporate suspension laws, federal rules of practice, and the doctrine of equitable tolling. Specifically, the Court provided a vital analysis of why California’s corporate revivor statutes cannot retroactively cure a defective Tax Court petition once the Internal Revenue Service (IRS) accrues a statute of limitations defense.

The Bipartisan Budget Act of 2015 (BBA) drastically altered the procedural landscape for partnership audits, replacing the TEFRA regime with a centralized partnership audit framework. As the IRS increases enforcement, particularly concerning syndicated conservation easements, tax professionals must understand how the Tax Court interprets the BBA’s strict notice requirements and the corresponding statute of limitations. The recent Tax Court opinion in Mammoth Cave Property, LLC v. Commissioner, 166 T.C. No. 4 (2026), provides critical guidance on how administrative defects in IRS notices impact the period of limitations on making adjustments under I.R.C. § 6235.

On March 5, 2026, the United States District Court for the Eastern District of Tennessee issued its memorandum opinion in CIC Services, LLC v. Internal Revenue Service, No. 3:25-cv-00146, ultimately upholding the Treasury Department and IRS’s Final Rule on micro-captive insurance reporting requirements. For tax professionals advising clients on the IRC § 831(b) election, this ruling represents a critical development in the compliance landscape, resolving a multi-year administrative law battle regarding the IRS’s authority to classify certain captive arrangements as listed transactions and transactions of interest.

The One, Big, Beautiful Bill Act of 2025 established a companion provision to the new Internal Revenue Code (IRC) Section 530A Trump Accounts by enacting IRC § 6434, the Trump Accounts Contribution Pilot Program. Under this program, the Secretary of the Treasury will make a one-time $1,000 contribution to the Trump Account of an eligible child.

The Treasury Department and the IRS have issued proposed regulations (REG-117002-25) outlining the procedural and definitional framework for making the pilot program election. For CPAs and EAs, understanding the mechanics of these rules is critical, as the regulations introduce novel tax administration concepts—such as the "special taxable year"—to effectuate the statutory intent.

The One, Big, Beautiful Bill Act of 2025 significantly altered the tax landscape for early childhood wealth building with the creation of Internal Revenue Code (IRC) Section 530A, introducing "Trump Accounts". Recently, the Treasury Department and the IRS issued proposed regulations (REG-117270-25) providing critical definitions and outlining the mechanics of electing to open an initial Trump account.

(Note: The legislation also enacted a related $1,000 contribution pilot program under IRC § 6434; however, the scope of this article is strictly limited to the foundational rules and definitions of the Trump Accounts themselves under IRC § 530A.  A separate article will discuss the proposed regulations related to the Trump Accounts that were issued at the same time as these regulations.)

In my 44 years of tax practice, I have witnessed numerous shifts in information reporting—from the early days of paper ledgers to the complex composite statements we see today. However, the introduction of digital asset reporting under IRC Section 6045 brings an entirely new challenge due to the staggering volume of transactions. To address this, the IRS and Treasury have issued proposed regulations (REG-105064-25) and Notice 2026-4, reshaping the rules for electronic furnishing of digital asset payee statements (Form 1099-DA).