Treasury Decision, Non-Applicability of Section 357(c) to Consolidated Groups, T.D. 10059, RIN 1545-BJ87, 91 Fed. Reg. 21253 (Oct. 16, 2026); codified at 26 C.F.R. § 1.1502-80(d)

For corporate tax practitioners advising consolidated affiliated groups, intercompany transfers of operating assets accompanied by assumed liabilities represent a routine yet highly technical area of subchapter C and consolidated return tax practice. Under general separate-return principles governed by Internal Revenue Code (I.R.C.) § 351 and § 357(c)(1), if the sum of liabilities assumed by a transferee corporation exceeds the total adjusted tax basis of property transferred in an exchange, the transferor must recognize gain equal to such excess. However, Treasury Regulation § 1.1502-80(d) explicitly overrides this general statutory rule, providing that I.R.C. § 357(c) does not apply to intragroup transfers governed by the intercompany transaction rules of Treas. Reg. § 1.1502-13.

While the turning off of I.R.C. § 357(c) prevents immediate gain recognition within a consolidated group, it historically introduced a significant statutory coordination glitch regarding the timing and mechanics of stock basis adjustments under I.R.C. § 358. Specifically, practitioners faced ambiguity over whether deductible liabilities described in I.R.C. § 357(c)(3)(A)—which normally do not reduce stock basis under I.R.C. § 358(d)(2) in a separate-return exchange—should reduce stock basis upon the initial asset transfer (a “front-end adjustment”) or only when absorbed as a deduction under the investment adjustment provisions of Treas. Reg. § 1.1502-32 (a “back-end adjustment”).

To eliminate lingering uncertainty resulting from the regulatory withdrawal of earlier proposed rules, the Department of the Treasury and the Internal Revenue Service (IRS) issued Notice of Proposed Rulemaking REG-134420-10 (89 Fed. Reg. 106884, Dec. 30, 2024), reproposing consolidated § 357(c) regulations in modified form. Subsequently, Treasury promulgated Final Regulations under Treasury Decision (T.D.) 10059 (91 Fed. Reg. 21253, Oct. 16, 2026). This article provides a comprehensive technical analysis of the reasons for these regulations, the Treasury’s statutory rationale under I.R.C. § 1502, the specific structural revisions to Treas. Reg. § 1.1502-80(d), comprehensive numerical illustrations, and practitioner reliance guidelines.

Department of the Treasury, Internal Revenue Service, Premium Tax Credit, Notice of Proposed Rulemaking and Notice of Public Hearing, REG-101576-26, RIN 1545-BS15, 26 CFR Part 1, FR Doc. 2026-21056, scheduled for publication in the Federal Register on Oct. 15, 2026

The Department of the Treasury and the Internal Revenue Service have issued a Notice of Proposed Rulemaking (REG-101576-26, RIN 1545-BS15) amending the Income Tax Regulations (26 CFR Part 1) under Section 36B of the Internal Revenue Code. These proposed regulations implement significant statutory amendments enacted under sections 71119 and 71301 through 71305 of Public Law 119-21, 139 Stat. 72, 306–315, 321–325 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA).

This article provides tax practitioners—specifically Certified Public Accountants (CPAs) and Enrolled Agents (EAs)—with a comprehensive technical breakdown of the proposed amendments, the IRS’s legal justification, statutory effective dates, and taxpayer reliance rules.

MD M. Rahman & Syeda Momotaz v. Commissioner, Docket No. 8286-23 (T.C. Oct. 7, 2026) (Bench Op. by Nega, J.)

In MD M. Rahman & Syeda Momotaz v. Commissioner, Docket No. 8286-23 (T.C. Oct. 7, 2026), the United States Tax Court delivered a bench opinion under Tax Court Rule 152 providing critical practical guidance for tax practitioners representing sole proprietors under audit. Presided over by Judge Joseph W. Nega, the decision addresses core procedural and substantive tax issues: the Commissioner’s authority to reconstruct gross income via the bank deposits method under Internal Revenue Code (I.R.C.) § 446(b), the strict evidentiary limits of the Cohan rule for Schedule C expenses where records are alleged to have been destroyed, and the mandatory burden of production placed on the Service under I.R.C. § 7491(c) and I.R.C. § 6751(b)(1) regarding written supervisory approval for accuracy-related penalties.

This technical article analyzes the factual matrix, the procedural history, the statutory framework, the judicial reasoning, and the practical takeaways for CPAs and Enrolled Agents managing examination and litigation strategies.

Rev. Rul. 2026-18, October 9, 2026

Under Section 61 of the Internal Revenue Code (I.R.C. § 61), gross income includes all income from whatever source derived, specifically encompassing fringe benefits provided to employees or independent contractors. When an employer provides noncommercial flights on employer-provided aircraft for personal purposes, the value of the flight must be included in the recipient’s gross income unless a statutory exclusion applies. To reduce administrative friction and valuation disputes regarding fair market value, the Internal Revenue Service provides a safe-harbor valuation methodology under Treasury Regulation Section 1.61-21(g).

Revenue Ruling 2026-18 sets forth the updated Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charges required to value noncommercial flights taken on employer-provided aircraft during the second half of calendar year 2026 (July 1, 2026, through December 31, 2026). This article examines the factual backdrop of the ruling, the administrative rationale for its publication, the underlying statutory and regulatory rules, the mathematical application of the SIFL formula, and key compliance considerations for tax professionals representing corporate clients and executive taxpayers.

In the Matter of the Consolidated Appeals of J. Burch, J. Carden, and K. Carden, OTA Case Nos. 230112266 & 230112267, 2026-OTA-28622 (Cal. Off. Tax App. July 24, 2026)

In a landmark decision for pass-through entity taxation and state income tax sourcing, the California Office of Tax Appeals (OTA) issued a consolidated opinion in the Appeals of J. Burch, J. Carden, and K. Carden (OTA Case Nos. 230112266 & 230112267, July 24, 2026). The OTA explicitly rejected the Franchise Tax Board’s (FTB) long-standing audit position—and its controversial FTB Legal Ruling 2022-02—which attempted to bifurcate the sale of a partnership interest by a nonresident into a deemed sale of underlying “hot assets” (unrealized receivables and inventory items under Internal Revenue Code (IRC) Section 751(a)) and a remaining sale of an intangible partnership interest under IRC Section 741.

Writing for a unanimous panel, Administrative Law Judge Kenneth Gast held that IRC Section 751(a) functions strictly as an anti-abuse characterization provision converting capital gain to ordinary income, rather than a sourcing provision that recasts a sale of an intangible partnership interest into an operational sale of underlying business assets. Aligning state tax jurisprudence with the U.S. Court of Appeals for the District of Columbia Circuit’s ruling in Rawat v. Commissioner, 108 F.4th 891 (D.C. Cir. 2024), the OTA held that California nonresident sourcing must follow California Revenue and Taxation Code (R&TC) Section 17952. Consequently, gains realized by nonresidents from the disposition of partnership interests are sourced to their state of domicile under the common law doctrine of mobilia sequuntur personam, unless the partnership interest itself acquired a business situs in California.

For tax practitioners representing nonresidents, partners in multi-tier structures, and private equity investors with California partnership holdings, this ruling provides crucial clarity and substantial precedent to challenge FTB audit assessments based on Legal Ruling 2022-02.

West v. Commissioner, T.C. Memo. 2026-105, Oct. 7, 2026

The petitioner, Andrew B. West, was an entrepreneur involved in various commercial activities during the 2015 and 2016 taxable years, operating primarily in Texas. During these years, Mr. West owned three limited liability companies: MPC Equipment, LLC; ABW Equipment Rentals, LLC; and Tilden Operating Management, LLC. On his federal individual income tax returns (Forms 1040), Mr. West reported these business activities across three separate Schedules C: Schedule C-1 for “Management Services,” Schedule C-2 for “MPC Equipment LLC,” and Schedule C-3 for “ABW Equipment Rentals LLC.” In addition to his own entity operations, Mr. West was employed by Oscar Leo Quintanilla to manage Mr. Quintanilla’s extensive business interests, which spanned oil and gas, cattle operations, and real estate development. Under a 2011 employment agreement with Paloma Cattle Co. Ltd., Mr. West served as president and CEO of several Quintanilla-owned entities and was entitled to an “Operating Bonus” equal to 6% of aggregate business profits.

The financial relationship between Mr. West and Mr. Quintanilla was highly intertwined and characterized by informal, centralized accounting. Mr. Quintanilla’s accountants managed a centralized bill-paying apparatus that paid expenses for Quintanilla entities as well as personal and business expenses incurred directly by Mr. West or his LLCs. Expenses paid on Mr. West’s behalf were centrally billed to him via intercompany invoices, which Mr. West then settled from his personal or LLC bank accounts. Under his employment agreement, Mr. West was entitled to full reimbursement for out-of-pocket expenses incurred on behalf of Quintanilla entities; the court found that this centralized payment structure ensured that reimbursable employment expenses were paid directly by Quintanilla entities and were not borne by Mr. West personally.

Rev. Proc. 2026-20, October 6, 2026

On October 6, 2026, the Internal Revenue Service (IRS) and the Department of the Treasury issued Revenue Procedure 2026-20, which describes an administrative safe harbor for State law trusts holding digital assets. Under this guidance, an arrangement formed as a trust under applicable State law that otherwise qualifies as an investment trust under Treas. Reg. § 301.7701-4(c) and as a grantor trust under I.R.C. §§ 671 and 677 may stake its digital assets without jeopardizing its classification as a trust for Federal income tax purposes.

Revenue Procedure 2026-20 expressly “clarifies, modifies, and supersedes Rev. Proc. 2025-31, 2025-48 I.R.B. 743, to address requests received by the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) for additional guidance on certain aspects of Rev. Proc. 2025-31.” Following the release of the 2025 safe harbor, taxpayers and practitioners sought crucial technical clarifications regarding:

• The specific proof-of-stake protocols covered under the safe harbor;

• The requirement that the Securities and Exchange Commission (SEC) approve trust disclosures;

• The utilization of multiple custodians in the staking workflow;

• The required scope and extent of contractually mandated slashing protection;

• The operational unstaking and sale of digital assets in anticipation of trust distributions;

• The requirement for consistent tax treatment of staking rewards;

• Whether liquidity transactions treated by the trust as borrowing digital assets qualify as contingent liquidity arrangements; and

• The exact scope of the safe harbor and the operational application of the transition grace period for existing trusts that had previously authorized staking activities.

In response, Rev. Proc. 2026-20 provides an updated, definitive regulatory roadmap while extending a limited six-month grace period from October 6, 2026, for existing trusts to amend their governing instruments and operational procedures to align with the revised safe harbor requirements.

End Tax Penalties on American Hostages Act, H.R. 9496, 119th Cong. (2026)

On September 30, 2026, Congress completed final passage of H.R. 9496, titled the “End Tax Penalties on American Hostages Act,” sending the measure to the President for signature. Passed by the House of Representatives under suspension of the rules on September 15, 2026, and subsequently passed by the Senate without amendment by unanimous consent on September 30, 2026, H.R. 9496 enacts significant statutory relief for U.S. nationals wrongfully detained or held hostage abroad.

The primary structural mechanism of H.R. 9496 is the addition of Section 7511 to Chapter 77 of the Internal Revenue Code of 1986 (IRC). Under new IRC § 7511, federal tax filing and payment deadlines are retroactively postponed, and associated interest, penalties, and additions to tax are systematically abated or refunded for individuals verified as hostages or wrongful detainees. Furthermore, the legislation establishes an administrative refund program allowing released captives, their spouses, or their dependents to claim refunds of penalties and interest paid for taxable years dating back to January 1, 2021, supported by dedicated extensions of the IRC § 6511 period of limitations.

For Certified Public Accountants (CPAs), Enrolled Agents (EAs), and tax controversy professionals, IRC § 7511 introduces a standardized administrative paradigm that removes affected taxpayers from traditional IRS penalty collection procedures, aligns Treasury databases with interagency intelligence lists, and creates a specialized refund remedy for historic tax liabilities.

Trump Accounts, 91 Fed. Reg. 63200 (Sept. 30, 2026) (codified at 26 C.F.R. pt. 1) (TD 10056)

Trump Accounts, 91 Fed. Reg. 63215 (proposed Sept. 30, 2026) (to be codified at 26 C.F.R. pt. 1) (CC-00226466-26)

U.S. Dep’t of the Treasury, Press Release SB-0642: Treasury Announces the Completion of Automatic Enrollment Today for Trump Accounts (Oct. 1, 2026)

Executive Summary and Scope of Treasury Announcement

On October 1, 2026, the Department of the Treasury issued Press Release SB-0642, officially announcing the nationwide completion of automatic enrollment for Trump accounts under Internal Revenue Code (IRC) Section 530A. Enacted pursuant to Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA), Section 530A establishes specialized, tax-advantaged traditional Individual Retirement Accounts (IRAs) maintained for eligible minors during a statutorily defined growth period ending on December 31 of the calendar year in which the beneficiary attains age 17.

The October 1 announcement marks a historic operational milestone in federal wealth-building policy. Through a single nationwide bulk election, Treasury successfully established auto accounts for more than 60 million American children who had not previously enrolled via manual opt-in elections, bringing total program coverage to approximately 73.3 million eligible minors across 44 million families. In announcing the completion of funding and account setup, Treasury Secretary Scott Bessent emphasized:

“Millions of children have already enrolled in Trump Accounts. With automatic enrollment, over 60 million more eligible children now have an account ready to be claimed... This is a transformative milestone in the Trump Administration’s effort to give every American child the opportunity to build generational wealth and jump-start their financial future.”

For tax practitioners, CPAs, and Estate Planning attorneys, the announcement shifts focus from initial account establishment to the technical administrative procedures governing how authorized parties claim these auto accounts, unlock the one-time $1,000 government seed contribution under IRC Section 6434, enable tax-free employer contributions under IRC Section 128, and navigate the dual regulatory framework created by Treasury Decision 10056 (26 CFR §§ 1.530A-1T, 1.530A-7T) and Notice of Proposed Rulemaking CC-00226466-26.

Federal Scholarship Tax Credit, Temporary Regulations, TD 10057, RIN 1545-BS17, 91 Fed. Reg. [page] (published Oct. 2, 2026) (codified at 26 C.F.R. pt. 1).

Federal Scholarship Tax Credit, Notice of Proposed Rulemaking and Notice of Public Hearing, REG-117199-25, RIN 1545-BR97, 91 Fed. Reg. [page] (prop. Oct. 2, 2026) (to be codified at 26 C.F.R. pt. 1).

On October 1, 2026, the Department of the Treasury and the Internal Revenue Service released a comprehensive regulatory package implementing the new nonrefundable Federal Scholarship Tax Credit under Internal Revenue Code (Code) Section 25F. This statutory credit was enacted by Section 70411 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA). Section 25F allows individual taxpayers a nonrefundable tax credit of up to $1,700 annually for qualified cash contributions made to certified scholarship granting organizations (SGOs) in taxable years ending after December 31, 2026. Concurrently, OBBBA Section 70411(b) enacted Section 139K, which excludes from gross income any scholarship amounts received by eligible students or their dependents from SGOs.

To establish the necessary administrative, operational, and procedural infrastructure prior to the January 1, 2027 effective date for taxpayer contributions, Treasury and the IRS simultaneously published Temporary Regulations under Treasury Decision 10057 (TD 10057, RIN 1545-BS17) and a Notice of Proposed Rulemaking under REG-117199-25 (RIN 1545-BR97). Published pursuant to the mandatory cross-referencing requirement of Code Section 7805(e)(1), the temporary and proposed regulations establish binding guidelines for individual contributors, SGOs, and participating States.

This technical article provides tax practitioners—CPAs, Enrolled Agents, and tax attorneys—with an exhaustive analysis of the regulatory framework. It examines the legal justifications articulated by Treasury, the structural additions and modifications to the Income Tax Regulations (26 CFR Part 1), the economic and administrative rationale underlying key choices, proposed effective dates, taxpayer reliance provisions, and a subsection-level analysis of each regulatory provision.

Title: National Taxpayer Advocate Enhancement Act of 2025
Bill Number: H.R. 997 (119th Congress)
Primary IRC Code Section Affected: 26 U.S.C. § 7803(c)(2)(D)(i)

Executive Summary & Legislative Status

On September 28, 2026, the United States Senate passed H.R. 997, the National Taxpayer Advocate Enhancement Act of 2025, by Unanimous Consent without amendment. This followed unanimous passage in the House of Representatives on March 31, 2025 by a roll call vote of 385–0 (Roll No. 85), following favorable reporting by the House Committee on Ways and Means (H. Rept. 119-46). The legislation has been cleared for enrolled print and sent to the President for signature.

Sponsored by Rep. Randy Feenstra (R-IA-4), H.R. 997 enacts targeted statutory amendments to Internal Revenue Code (IRC) § 7803. The primary purpose of the Act is to establish independent statutory authority for the National Taxpayer Advocate (NTA) to appoint dedicated legal counsel within the Taxpayer Advocate Service (TAS) who report directly to the NTA, thereby removing TAS legal personnel from the supervisory chain of the Treasury Legal Division and IRS Chief Counsel.

IRS Notice 2026-63, 2026-42 I.R.B. ___ (Sept. 30, 2026)

On September 30, 2026, the Internal Revenue Service released Notice 2026-63, granting comprehensive administrative tax relief under Internal Revenue Code (I.R.C.) § 7508A to individuals and entities impacted by the ongoing terroristic action in the State of Israel throughout calendar years 2025 and 2026. This administrative guidance extends statutory deadlines for time-sensitive tax compliance obligations that were due to be performed on or after September 30, 2026, and before September 30, 2027, postponing the required performance date to September 30, 2027.

The notice addresses an evolving humanitarian and security crisis, serving as the latest installment in a sequence of relief measures. The IRS previously issued Notice 2023-71, Notice 2024-72, and Notice 2025-53 to assist taxpayers affected by terroristic actions in the region. Notice 2026-63 formally bridges these prior grants of relief, establishing that for eligible taxpayers, acts previously postponed through September 30, 2026, under Notice 2025-53 are further postponed through September 30, 2027.

Fine v. Commissioner, 167 T.C. No. 13 (2026)

When representing taxpayers in protracted IRS examinations, tax practitioners frequently confront statute of limitations extensions under Internal Revenue Code (I.R.C.) § 6501(c)(4). A common procedural question arises when settlement negotiations fail: Can a taxpayer who previously executed a fixed-date extension on IRS Form 872 (Consent to Extend the Time to Assess Tax) unilaterally terminate that extension prior to its stated expiration date by sending IRS Form 872-T (Notice of Termination of Special Consent to Extend the Time to Assess Tax)?

In Fine v. Commissioner, 167 T.C. No. 13 (2026), the United States Tax Court answered this question with an emphatic “no.” Addressing an open issue in the U.S. Court of Appeals for the Eleventh Circuit, Judge Ashford held that Form 872-T applies exclusively to open-ended waivers executed on Form 872-A (Special Consent to Extend the Time to Assess Tax) and has no legal effect on a properly executed, fixed-date Form 872. Consequently, a Form 872 remains binding until its negotiated expiration date unless the IRS issues a Notice of Deficiency or the parties execute a subsequent written agreement.

For Certified Public Accountants (CPAs) and Enrolled Agents (EAs), Fine v. Commissioner serves as a critical procedural precedent. It underscores the binding nature of fixed-term waivers, highlights the strict contractual interpretative rules applied to IRS consent forms, and reinforces that strategic unhappiness with Appeals settlement progress does not permit taxpayers to alter agreed-upon extension terms.

Sevillo Fine Foods LLC v. United States, Case No. 2:25-cv-00273-DBP, 2026 U.S. Dist. LEXIS _____ (D. Utah Sept. 28, 2026)

As tax practitioners evaluating Employee Retention Credit (ERC) refund claims, CPAs and Enrolled Agents (EAs) face heightened scrutiny from both the Internal Revenue Service and federal courts regarding claims grounded in the “Suspension Test.” A significant subset of ERC claims filed during the pandemic relied on indirect supply chain disruptions, arguing that upstream bottlenecks—such as maritime port congestion—constituted a partial suspension of business operations.

In Sevillo Fine Foods LLC v. United States, Case No. 2:25-cv-00273-DBP (D. Utah Sept. 28, 2026), Magistrate Judge Dustin B. Pead granted the government’s partial motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, dealing a decisive blow to supply chain ERC claims predicated on generalized port delays and indirect workplace safety regulations. The District Court articulated three independent, legal grounds for dismissal:

1. Identification of a qualifying governmental order: Advisory documents and workplace safety mandates that regulate conditions of operation rather than capping throughput do not constitute orders “limiting commerce.”

2. Standard of causation: The statutory phrase “due to” in Section 2301(c)(2)(A)(ii)(I) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) requires both factual (but-for) and proximate cause, barring claims linked through an attenuated supply chain.

3. Definition of partial suspension: Supply delays, increased costs, and capacity reductions do not equate to an operational suspension, particularly where a taxpayer maintains its workforce and revenues.

Trump Accounts, 91 Fed. Reg. 63200 (Sept. 30, 2026) (TD 10056); Trump Accounts, 91 Fed. Reg. 63215 (proposed Sept. 30, 2026) (CC-00226466-26)

The Department of the Treasury and the Internal Revenue Service have jointly issued temporary regulations (Treasury Decision 10056, RIN 1545-BS27) and a concurrent notice of proposed rulemaking (CC-00226466-26, RIN 1545-BR91) implementing Internal Revenue Code (IRC) Section 530A. Enacted under Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly referred to as the One, Big, Beautiful Bill Act (OBBBA), Section 530A establishes “Trump accounts”—specialized traditional Individual Retirement Accounts (IRAs) maintained for eligible minors during a statutorily defined “growth period” ending on December 31 of the calendar year in which the beneficiary attains age 17.

Treasury and the IRS issued these dual regulations to establish an immediate, uniform, and legally sound administrative structure for account enrollment, master group trust investment, auto-account administration, and broad-based private and governmental funding through qualified general and stock contributions. The immediate release of temporary regulations under 26 CFR §§ 1.530A-1T and 1.530A-7T addresses an urgent statutory mandate: while contributions to Trump accounts were statutorily prohibited prior to July 4, 2026, accounts may now accept funds, and Treasury auto-enrollment elections are slated to commence on or about October 1, 2026. Without immediately effective rules, trustees, financial agents, and donors lacked an operative regulatory framework to execute account creation, protect taxpayer return information, and administer large-scale contributions.

Amodio v. Commissioner, T.C. Memo. 2026-96, Docket No. 9959-22L (Sept. 28, 2026)

For tax controversy practitioners, Certified Public Accountants, and Enrolled Agents, navigating the personal liability provisions of Internal Revenue Code (I.R.C.) § 6672 requires a precise understanding of the statutory standards for “willfulness” and the joint-and-several mechanisms governing the Trust Fund Recovery Penalty (TFRP). In Amodio v. Commissioner, T.C. Memo. 2026-96 (Sept. 28, 2026), Special Trial Judge Carluzzo delivered an instructive opinion examining two pivotal tax controversy issues: (1) whether a corporate officer acts “willfully” under I.R.C. § 6672(a) when, upon discovering pre-existing tax delinquencies, he uses unencumbered corporate funds to pay net wages and union benefits to maintain business operations, and (2) whether an Offer-in-Compromise (OIC) accepted by the IRS to compromise the underlying corporate employment tax debt operates to cap the individual officer’s derivative TFRP liability.

This article examines the factual matrix of Amodio, dissects the taxpayer’s statutory arguments, outlines the Tax Court’s legal analysis, and evaluates the judicial synthesis of joint-and-several tax principles against Internal Revenue Manual (IRM) administrative guidelines.

Rev. Rul. 2026-20, 2026-20 I.R.B. 1, September 28, 2026

Notice 2026-62, 2026-20 I.R.B. 1, September 28, 2026

In a coordinated regulatory release, the Department of the Treasury and the Internal Revenue Service issued Revenue Ruling 2026-20 alongside Notice 2026-62 to address what tax administrators describe as “novel investment fund strategies that purport to produce tax results that may be inconsistent with the purpose and proper application of the relevant federal tax rules.” Targeted at certified public accountants, enrolled agents, and corporate tax counsel, these administrative pronouncements draw a decisive boundary between conventional, long-established exchange-traded fund (ETF) operations and tax-motivated, structured transactions designed to circumvent gain recognition under Subchapter M and Subchapter C of the Internal Revenue Code (Code).

At the center of this enforcement initiative is Section 852(b)(6), a specialized nonrecognition provision applicable to regulated investment companies (RICs). While Section 852(b)(6) historically shields a RIC from recognizing gain under Section 311(b) when distributing appreciated portfolio property in redemption of its stock upon a shareholder’s demand, tax advisors have increasingly paired this provision with Section 351 corporate formation rules and partnership exchange fund mechanisms under Section 721. Through Revenue Ruling 2026-20, the IRS invokes longstanding step-transaction and substance-over-form doctrines to recharacterize so-called “Section 351 conversion transactions” as direct, taxable asset exchanges under Section 1001. Concurrently, Notice 2026-62 serves as a broad warning shot across several other atypical usages of Section 852(b)(6) and multi-position derivative strategies, signaling prospective or retroactive regulatory action, potential transaction-of-interest designations, and direct examination challenges.

Notice of Proposed Rulemaking, Election to Pay in Installments Tax on Gain from Certain Farmland Property, REG-117095-25, 91 Fed. Reg. 63812 (proposed Sept. 29, 2026)

The Department of the Treasury and the Internal Revenue Service have issued proposed regulations (REG-117095-25) implementing Internal Revenue Code (IRC) Section 1062. This statutory provision was enacted by Section 70437 of Public Law 119-21, 139 Stat. 72, 248–250 (July 4, 2025), commonly referred to as the One, Big, Beautiful Bill Act (OBBBA). The primary legislative purpose underlying Section 1062 is to facilitate the transition of agricultural real property to active, younger generations of farmers by easing the immediate capital gains tax burden associated with outright sales of farmland.

Under Section 1062(a), eligible taxpayers who recognize gain from the sale or exchange of “qualified farmland property” to a “qualified farmer” may elect to pay their “applicable net tax liability” in four equal annual installments rather than recognizing the full tax obligation in the year of disposition. The Treasury Department promulgated these proposed regulations pursuant to its general rulemaking authority under Section 7805(a), as well as specific statutory mandates under Section 1062(c)(2) (governing pass-through entity elections) and Section 1502 (governing consolidated corporate groups).

Juliet R. Singh v. United States, No. 1:25-cv-00056 (E.D.N.Y. Sept. 24, 2026)

Tax practitioners frequently encounter situationally complex client cases where taxpayers, acting without immediate legal or tax counsel, submit informal written requests to the Internal Revenue Service (IRS) explaining economic hardships or casualty events. When formal amended returns (Form 1040-X) are subsequently submitted past the standard statutory period under Internal Revenue Code (IRC) § 6511(a), the IRS routinely asserts a lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), claiming sovereign immunity.

In Juliet R. Singh v. United States, No. 1:25-cv-00056 (E.D.N.Y. Sept. 24, 2026), United States District Judge Ann M. Donnelly issued a pivotal ruling denying the government’s motion to dismiss for lack of subject matter jurisdiction. The decision provides critical guidance for Certified Public Accountants (CPAs) and Enrolled Agents (EAs) on two distinct legal theories preserving refund jurisdiction: the Informal Claim Doctrine and statutory postponements under IRC § 7508A(d) resulting from federally declared disasters.

Jagannath v. Commissioner, T.C. Memo. 2026-92 (Sept. 24, 2026)

In Jagannath v. Commissioner, T.C. Memo. 2026-92 (Filed September 24, 2026), the United States Tax Court addressed the application of section 4958 intermediate sanctions excise taxes to an uncorrected transaction between a Section 501(c)(3) public charity and its founder/president. The decision serves as a stark reminder for tax practitioners regarding the strict statutory mechanics of IRC § 4958, the evidentiary burden on taxpayers under Subtitle D, and the mandatory reporting rules on Form 4720.

The petitioner, Sitaraman Jagannath, holds bachelor’s and master’s degrees in chemical engineering and worked as a chemical engineer and real estate manager. On September 9, 2015, Mr. Jagannath formed Senecura, a Tennessee non-profit corporation designed to assist indigent individuals with basic living necessities. On September 29, 2015, the Internal Revenue Service (IRS) issued Letter 5436 approving Senecura’s exemption from corporate income tax under IRC § 501(c)(3) and granting public charity status under IRC § 170(b)(1)(A)(vi), retroactive to September 9, 2015.