Section 183, which limits or entirely eliminates deductions attributable to activities not entered into for profit, may be coming in for more attention from an invigorated IRS. Section 183 is commonly referred to, not without reason, as the hobby loss rule. Based on my extensive study of the case law, I believe that practitioners widely misunderstand 183. I have noted cases where taxpayers had not gotten a heads up from their adviser. More commonly there is a misunderstanding of 183(d), a presumption in favor of taxpayers that is rarely relevant at all, but which the agency can never use against them. Most important is the failure to appreciate that it is the objective of making a profit not the expectation that is necessary. With that in mind here are the most recent developments...
Kwong v. United States: A Pandemic-Era Decision That Could Reshape Tax Deadlines, Penalties, and Refund Opportunities
Dominique Molina, CPA MST CTS
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.
