United States: Income Tax

Partner Lauren Azebu examines the qualified small business stock (QSBS) gain exclusion rules under Section 1202, exploring the complexities that arise when QSBS is held through pass-through entities. The article analyzes technical issues including ownership limitations, transfer restrictions, and entity conversion strategies, while highlighting areas where guidance remains limited and emphasizing the importance of proactive planning.

H. David Rosenbloom contributes an essay examining United States income tax treaties as part of a commemorative publication honoring Kees van Raad's nearly five decades of teaching international tax law. The essay explores the defense and significance of U.S. tax treaty policy within the broader context of international taxation.

The Second Circuit Court of Appeals has weighed in on a critical tax question affecting partnership and LLC owners, affirming a narrow interpretation of who qualifies as a "limited" partner exempt from self-employment tax. This decision creates potential conflict with the Fifth Circuit's approach, raising questions about whether the Supreme Court will need to resolve the split and provide definitive guidance on this important issue for business owners.

Last month, the Treasury Department and the IRS issued proposed regulations that provide guidance on the nondiscrimination testing rules for dependent care assistance programs (DCAPs) under Section 129 of the Internal Revenue Code (the “Code”).

The Treasury Department and IRS have proposed new regulations that would establish an explicit racial nondiscrimination requirement for private schools seeking federal tax exemption under Section 501(c)(3). These proposed rules go beyond existing law by prohibiting all forms of racial discrimination in education regardless of intent, legality, or purpose, potentially affecting admissions policies, scholarship programs, and other school-administered initiatives.

The Second Circuit's ruling in Soroban Capital Partners LP v. Commissioner establishes that a "limited partner" must have both limited liability and no role in running, managing, or controlling the partnership to qualify for the self-employment tax exception. This decision, alongside the Fifth Circuit's revised opinion in Alain v. Commissioner, creates a circuit split with significant implications for fund managers who structure ownership through limited partnerships to minimize self-employment tax

In an ambitious and controversial move to address New York City’s housing affordability crisis and generate new revenue streams, New York City introduced a pied-à-terre tax for high-value non-primary residential...

The Treasury Department formally declined a request from a group of Senate Democrats to change the tax rules governing how employees value personal use of employer-provided aircraft, preserving the Standard Industry Fare Level (SIFL) valuation method.

The United States Tax Court recently issued a reminder that tax sophistication can support a finding of civil fraud. In Janangelo v. Commissioner, T.C. Summary Opinion 2026-8, the court found that a longtime IRS revenue agent, who is also a licensed attorney and CPA, committed civil fraud by claiming a series of fabricated and unsubstantiated deductions across four consecutive tax years.