August 12th, 2025
August Federal Tax Update
Posted in: Tax Law Tagged: David S. De Jong
Author: David S. De Jong
INDIVIDUALS
In Feige v Commissioner, TC Memo 2025-88, the Tax Court rejected multiple arguments of a terminated employee who received 100,000 shares of company stock at the time of her departure and found the value of the shares to be taxable as compensation, the Court concluding that they were not subject to a substantial risk of forfeiture and were immediately transferrable.
In New Jersey v. Yellen, 136 AFTR 2d 2025 -___, the Second Circuit Court of Appeals agreed with a New York Federal District Court that regulations denying a charitable deduction for “contributions” to state-administered charitable funds in lieu of direct payment of state taxes in order to avoid the $10,000 cap are valid.
In Johnson v. Commissioner, TC Memo 2025-87, the Tax Court disallowed a charitable deduction of $43,000 by a city of Baltimore employee earning $77,000 despite a receipt from the public charity; the Court noted that the taxpayer was the founder of the charity with a mission to find the killer of the taxpayer’s nephew and was skeptical of the claimed cash donation.
In Information Release 2025-82 IRS announced that payroll withholding tables will not change for 2025 notwithstanding the general tax reduction under the One Big Beautiful Bill Act.
RETIREMENT AND ESTATE PLANNING
In Letter Ruling 202535015, IRS waived the 60-day rule to allow the victim of financial fraud to restore funds to an IRA.
BUSINESS
Proposed Regulations under Code Section 132, if finalized, would have IRS utilize NAICS business codes rather than the traditional SIC codes for categorizing businesses for fringe benefit purposes.
In CFM Insurance v. Commissioner, TC Memo 2025-83, the Tax Court ruled that payments to a captive insurance company by a grocery store chain were not deductible despite the reasonableness of the premiums and sufficient risk distribution as the company failed to timely issue valid policies, it had conflicting and ambiguous policy terms, it irregularly handled claims and it had absentee owners with little knowledge of operations.
Pimlico LLC v. Commissioner, 136 AFTR 2d 2025-___, the Second Circuit Court of Appeals agreed with the Tax Court that the contribution of distressed trade receivables by a partner followed by a withdraw of a new partner’s cash contribution constituted a disguised sale rather than a contribution to capital.
PROCEDURE
In McCrory v. United States, 136 AFTR2d 2025 -5417, the Federal Circuit Court of Appeals agreed with the Court of Federal Claims that denials of claims by whistleblowers cannot be appealed into the courts as they are discretionary in nature.
In Silver Moss Properties v. Commissioner, 165 TC No. 3, the Tax Court held that a finding of civil fraud does not require a jury trial (which would have taken away jurisdiction of the Tax Court in such matters).
In Murrin v. Commissioner, 136 AFTR 2d 2025-___, the Third Circuit Court of Appeals agreed with the Tax Court that the statute of limitations for individual assessment remains open in the case of fraud by a taxpayer’s preparer even if the taxpayer was not directly responsible for the fraud.
In Buller v. Commissioner, 136 AFTR 2d 2025 -___, the Second Circuit reversed the Tax Court and joined the Third Circuit in concluding that the 90-day deadline for filing a Tax Court petition in an income tax matter is not jurisdictional and an exception may apply for good cause; days later in Oquendo v. Commissioner, 136 AFTR2d 2025 -_____, the Sixth Circuit Court of Appeals, also reversing the Tax Court, reached the same conclusion (the Seventh and Ninth Circuits are in opposition).
In United States v. Tri-Ack Property Management, 136 AFTR 2d 2025 -___, a Florida Federal District Court allowed the seizure of real property transferred by a defunct corporation to the stockholder where the corporation had an existing lien for unpaid taxes.
In Walsh v. Commissioner, TC Memo 2025-91, the Tax Court denied equitable relief to a former spouse who had lived an extravagant lifestyle while a party to her ex-husband’s years of noncompliance and failed to timely file subsequent year returns, one of which omitted taxable alimony.
In Wright v. Commissioner, 136 AFTR2d 2025-5388, the Eleventh Circuit Court of Appeals affirmed a decision of the Tax Court that an individual who did not report her own social security income could not claim innocent spouse status through equitable relief; however, the Court seemed to err by stating that an individual is ineligible for innocent spouse status of any type as regards the individual’s own income, ignoring exceptions not applicable to the case in issue.
