Loopholes

The Fifth Circuit Court of Appeals opinion in Sirius Solutions L.L.L.P. v. Commissioner may change our views of entity choice. If the decision holds up, partnerships will be able to effectively make the portion of limited partner income subject to self-employment tax whatever they want, including zero. This contrasts with the IRS position upheld by the Tax Court in Soroban Capital that treated all of the income of limited partners who were active in the business as self-employment income.

April brings both anomalies and the same-old from Tax Court. Congressional enactments that misfire give opportunities to inventive practitioners, while self-represented petitioners continue to do the darndest things. All these are teaching moments that make "the small court" a continuing professional education course that never ends.

Think Outside the Tax Box is thrilled to bring you the 2026 Summer Education Series, sponsored by Sandy Bay! The fifth installment of this beloved annual series, we will be bringing our loyal subscribers monthly webinars featuring some of the brightest minds in tax all summer long. Each webinar will feature our usual blend of high-quality education and entertainment and include continuing education credits for those who qualify. All of this is included in your regular subscription! Continue reading to see what we have in store...

In the Fall of 2025, Bitcoin reached an all-time high of over $120,000. Since then, it fell over 40% to under $70,000 in the first quarter of 2026, before slightly recovering, currently resting around $75,000 as of this writing. With the steep drop in the price of Bitcoin and other cryptocurrencies, a common question from taxpayers is whether they can use the current losses to offset their other income. Large investors and professionals such as Grant Cardone and Shehan Chandrasekera (Head of Tax Strategy at Cointracker) have suggested that cryptocurrency can be sold and bought back immediately to claim the tax benefits. As with most things, the answer to this is not as simple as they portray, and many commentators, influencers, and sometimes professionals, miss the intricacies of cryptocurrency taxation.

The buzz around the Kwong v. United States decision is quickly turning into something very real for practitioners: potentially a wave of Form 843 claims tied to COVID-era penalties and interest. With voices like Frank Agostino pushing for action, the message is clear: dig into client transcripts and don’t sit this one out, even though the outcome is still being litigated.

The 2025 court decision, Kwong v. United States, is quietly gaining traction among tax professionals for exactly these reasons. Its implications could be far-reaching, potentially opening the door to refund claims, penalty abatements, and revived tax deadlines that many assumed were long closed. But there’s a catch: the opportunity to act may be time-sensitive, and the window to preserve claims could begin closing in just a few short weeks. Here’s what the court actually decided and why it matters now.

The one unvarying constant of Tax Court is variety: even long-established principles solve new problems. March saw a new look at Work Opportunity Tax Credit (WOTC) and the Empowerment Zone Employment Credit (EZEC) and a first look at the BBA reset of the partnership-partner relationship. Bitcoin, specifically hard-forked coins, are in view. The usual suspects like discovery jousts, SOL, and equitable tolling continue to show up. Take a look.

As tax professionals, we must recognize a profound truth that most Americans never fully grasp: The United States doesn't have a single tax system, it has two fundamentally different systems operating in parallel. Understanding this dichotomy is perhaps the most important insight you can share with your clients, as it forms the foundation for virtually every advanced tax strategy.