Key Takeaways
- CAMT
- Priority Guidance Plan
- Interest Capitalization
- Crypto
- Shutdown
- EV Credit
- Research Credit Form
- Deportations
- TIGTA
- ERC
- In the Courts
- Name Your Car
CAMT
IRS Makes Host of Book-Tax Rule Changes; Companies Want More – Michael Rapoport, Bloomberg ($):
In two notices this week, the agencies said they planned to revamp their proposed regulations on the corporate alternative minimum tax in a dozen different ways, to reduce complexity and give taxpayers greater flexibility. The revisions help everyone from holders of digital assets to acquisitive companies to companies in industries like utilities, shipping, and insurance.
Priority Guidance Plan
Focus of Treasury's International Tax Guidance Shifts to OBBBA – Jonathan Curry, Tax Notes ($):
The 2025–2026 priority guidance plan, which was released late September 30, substantially reshuffles the IRS and Treasury’s international tax guidance near-term plans to focus on implementation of the Trump administration’s big legislative victory.
Deregulation, GOP Tax Law Is Focus of Trump’s IRS Priorities – Lauren Vella & Erin Slowey, Bloomberg ($):
A major focus of the IRS priority guidance plan is issuing guidance to implement Republicans’ sweeping tax-and-spending law, as well as addressing digital assets and implementing the SECURE 2.0 retirement law.
Interest Capitalization
Few Changes in Final Interest Capitalization Rules – Nathan J. Richman, Tax Notes ($):
The final regulations (T.D. 10034), released October 1, amend the uniform capitalization rules under section 263A to remove a provision invalidated by the Federal Circuit in 2012.
IRS Issues Final Rules on Interest Requirements for Property – Lauren Vella & Martha Mueller Neff, Bloomberg ($):
The final regulations (RIN 1545-BN93, TD 10034) removed the associated property and similar rules from the existing regulation under Section 263 that provide interest capitalization requirements for improvements to certain property.
IRS Final Property Capitalization Rule Allows More Deductions – Anna Scott Farrell, Law 360 ($). “Taxpayers will be able to deduct more interest rather than having to capitalize it when making improvements to property under final regulations released Wednesday by the Internal Revenue Service.”
Crypto
Three Tax Changes the Crypto Industry Wants Congress to Address – Katie Lobosco, Tax Notes ($):
Creating clearer rules for cryptocurrency taxation was the focus of a Senate Finance Committee hearing October 1, during which lawmakers heard from two crypto industry representatives, as well as a tax lawyer and a CPA.
Senate Panel Urged to Update Tax Code for Digital Assets – Asha Glover, Law 360 ($). “Congress needs to create tax rules for digital assets such as cryptocurrency and nonfungible tokens because the current regime creates uncertainty for taxpayers, digital asset stakeholders told the Senate Finance Committee on Wednesday.”
Wyden Opens Tax Dodging Probe Into Crypto Hedge Fund Founder – Stephanie Soong, Tax Notes ($):
Senate Finance Committee ranking member Ron Wyden of Oregon announced October 1 an ongoing probe into Dan Morehead, founder of Pantera Capital, a day after sending a letter to the billionaire investor asking for more details about his tax affairs.
Wyden Probes Crypto Investor's Possible Tax Bill Dodging – Asha Glover, Law 360 ($):
Wyden has launched an investigation into ultra-high-net-worth U.S. individuals — including Daniel Morehead, the founder of Pantera Capital — who have established residency in Puerto Rico and claimed a tax exemption offered under the territory's Act 60, according to a letter Wyden sent to Morehead, dated Tuesday. The program, originally enacted in 2012, allows "bona fide" residents to avoid paying taxes on passive income, such as capital gains realized or accrued. The program also allows Puerto Rico residents to avoid paying U.S. federal income taxes on income sources from within the commonwealth if they have applied for an exemption.
Crypto Titan’s Move to Puerto Rico Spurs Wyden Tax Evasion Probe – Michael J. Bologna & Chris Cioffi, Bloomberg ($):
Sen. Ron Wyden (D-Ore.), ranking member of the Senate Finance Committee, accused Pantera Managing Partner Dan Morehead of refusing to cooperate with his staff’s investigation of tax avoidance by wealthy Americans relocating to Puerto Rico. Wyden questioned whether Morehead had properly characterized his US tax obligations on his share of Pantera gains from the sale of assets. Wyden sent an initial letter to Morehead in January, questioning his conduct after becoming a resident of Puerto Rico in 2022.
Strategy Rises as Saylor Sees Exemption from Corporate Tax – Monique Mulima & David Pan, Bloomberg ($):
As Bitcoin prices gained this year, Strategy expected in 2026 to be subject to the 15% corporate alternative minimum tax, which applies to companies exceeding $1 billion in a three-tax-year period preceding the initial tax year.
Shutdown
Trump Plans to Use Shutdown to Fire Federal Workers This Week – Erik Wasson, Gregory Korte, Steven T. Dennis, & Jamie Tarabay, Bloomberg ($):
Vought told House lawmakers Wednesday that some federal agencies will move to terminate workers within one to two days, according to people familiar with the remarks, who requested anonymity to discuss a private meeting.
Insurers Spend Big to Save Credits Central to Shutdown Fight – Emily Birnbaum, Bloomberg ($):
“Health care costs will skyrocket,” the advertisements warn, urging Americans to “Tell Congress” to act to continue the tax credits as the video shifts to a view of the Capitol building.
Trump administration seeks to exert control over government shutdown – Jacob Bogage, Riley Beggin, Hannah Natanson, & Olivia George, Washington Post:
Most federal government functions were halted after funding ran out and Congress deadlocked over how to extend spending laws.
Vice President JD Vance said that officials were “going to have to lay some people off” during a prolonged shutdown to prioritize funding for essential services, though the size of the federal workforce is unrelated to the country’s financial health during a lapse in funding.
EV Credit
GM, Hyundai, Ford Extend EV Discount as Tax Credit Expires – Gabrielle Coppola, David Welch, & Keith Naughton, Bloomberg ($):
Car companies are stepping in to preserve discounts and smooth the sell-down of existing EV inventory after the federal EV subsidy phased out Sept. 30. GM, Ford and Jeep-owner Stellantis NV are making the $7,500 discount available for leased vehicles that are in transit or on dealer lots. The offers from Hyundai and Stellantis apply to leases and purchases; the Korean automaker will kick in $7,500 in cash for the 2025 version of its Ioniq 5; it’s also lowering the price of the 2026 model by as much as $9,800, depending on the trim.
Research Credit Form
IRS Postpones Full Implementation of New Research Credit Form – Mary Katherine Browne, Tax Notes ($):
The IRS made its decisions regarding draft Form 6765, “Credit for Increasing Research Activities,” through March 31, 2026, “to alleviate taxpayer burden and in the interest of fair and effective tax administration,” according to an October 1 release. The agency said it “received comments in which external stakeholders requested additional time to share feedback” on the draft form and related instructions.
Deportations
Groups Seek Block on Use Of IRS, SSA Data for Deportations – Julie Manganis, Law 360 ($). “A coalition of immigrant advocacy groups has asked a Massachusetts federal judge to block the government from the "unfettered" use of Internal Revenue Service and Social Security Administration data to identify and target millions of people for deportation.”
TIGTA
Downsized IRS Faces Tough 2026 Filing Season, Watchdog Warns – Chris Cioffi, Bloomberg ($):
Major workforce reductions to key IRS programs under Trump administration initiatives to slash the federal workforce—some delayed until after the 2025 filling season—could spell trouble for the 2026 filing season, according to a new Treasury Inspector General for Tax Administration report.
IRS Watchdog’s Website Goes Dark After OMB Cuts – Tyrah Burris, Tax Notes ($). “The Treasury Inspector General for Tax Administration website was unavailable a day after the Office of Management and Budget decided not to appropriate funds to TIGTA’s oversight group for fiscal 2026.”
ERC
Alarm Rises as Employee Retention Credit Claims Continue to Lag – Trevor Sikes, Tax Notes ($). “The IRS’s continuing unresponsiveness to appeals of employee retention credit disallowances is a growing concern for employers, especially amid a flood of new ERC examinations, tax professionals say.”
In the Courts
Faulting IRS, Appeals Court Remands 3M Transfer Pricing Dispute – John Woolley & Tristan Navera, Bloomberg ($):
The US Court of Appeals for the Eighth Circuit reversed the IRS’s victory, holding that allocation powers Congress granted the agency under IRC Section 482 don’t support the agency’s actions in the case, nor can the IRS preempt the statute with the Treasury’s “blocked income” rule, 26 CFR Section 1.482-1(h)(2).
Eighth Circuit: Chevron’s Fall and Loper Bright’s Rise Favor 3M – Alexander F. Peter, Tax Notes ($):
In its October 1 judgment and opinion in 3M Co. v. Commissioner, the Eight Circuit remanded the case to the Tax Court to redetermine the taxes owed by 3M for 2006, excluding the $23.7 million in reallocated licensing fees. The best reading of section 482 neither mandates nor allows reallocation of income to the United States that is legally barred from being paid, the court held in an opinion authored by Judge David Stras. The court avoided a holding invalidating the treasury regulation that could potentially provide such authorization. It instead focused on a contradictory IRS position advocating for an overbroad interpretation of the statute as now controlling after the Supreme Court limited agency power in its 2024 decisions.
8th Circ. Reverses IRS Win In 3M Transfer Pricing Case – Natalie Olivo, Law 360 ($). “The Eighth Circuit reversed a U.S. Tax Court ruling Wednesday that backed the Internal Revenue Service's decision to reallocate nearly $24 million of 3M Co.'s Brazilian income, holding that the transfer pricing regulations underlying the adjustment are invalid.”
Altria Loses Litigation on Downward Attribution of Foreign Stock – Michael Smith, Tax Notes ($). “A U.S. district court has determined that tobacco giant Altria is required to include $38 million of subpart F inclusions as income stemming from downward attribution ownership of controlled foreign corporations.”
Iron Mountain Can Keep $142 Million IRS Contract After Protests – Alexis Waiss, Bloomberg ($). “Two IT management services companies can no longer pursue their bid protests against the Internal Revenue Service’s grant of a $142 million task order to Iron Mountain Information Management LLC, a federal court said.”
Tax Court Backs IRS' Rejection of Excise Tax Debt Settlement – Anna Scott Farrell, Law 360 ($). “The Internal Revenue Service was justified in rejecting an inspection company's bid to settle $9 million worth of unpaid excise taxes related to the company's failure to meet minimum funding standards for its employee pension plan, the U.S. Tax Court said Wednesday.”
What Day is it?
Its National Name Your Car Day! It took me two weeks to name my dog… this could take a while.
Make a habit of sustained success.
