Internal Revenue Service Clarifies “Qualified Tips” Deduction

The “qualified tips” deduction is often incorrectly described as a “no tax on tips” provision. On September 19, 2025, the Internal Revenue Service issued proposed regulations under Code Section 224 (the “Code Section 224 Proposed Regulations”). Perhaps the key topic addressed by the Code Section 224 Proposed Regulations is the meaning of the phrase, “an occupation which customarily and regularly received tips on or before December 31, 2024”. Qualified tips must be paid without compulsion. Thus, service charges, automatic gratuities and any other mandatory amounts automatically added to a customer’s bill by the vendor or establishment are not qualified tips, even if the amounts are subsequently distributed to employees. “Table 1” in the Code Section 224 Proposed Regulations lists 68 “occupations” as “Occupations that Customarily and Regularly Received Tips on or Before December 31, 2024” – the 68 listed below.

“Relevant” Under the Economic Substance Doctrine – The Case of Patel v. Commissioner

One of the basic principles of tax law is the economic substance doctrine. As recognized for many years in case law, under the economic substance doctrine, courts would generally examine both whether a transaction had economic substance beyond tax benefits and whether there was a nontax business purpose for entering the transaction; transactions that could not meet the economic substance doctrine could be disregarded or disallowed for tax purposes. The Tax Court in the Patel case concluded that (1) the taxpayer’s captive insurance company transactions did not have economic substance under the two-part “economic substance doctrine” test.

In the Matter of the CES 2007 Trust – A Victory for the Delaware Domestic Asset Protection Trust

Among the many tools available for persons seeking asset protection is the “domestic asset protection trust” (the “DAPT”). Broadly speaking, DAPTs are U.S. domestic trusts established by a grantor, who generally retains certain rights over the trust, but wants the assets of the trust to be protected from creditors.

Estate of Rowland – An Important Federal Estate Tax Case Concerning Portability

Given that asset values tend to increase over time, and Federal estate tax liability tends to arise more on the death of a “second-to die” spouse than on the death of a “first-to-die” spouse, portability can be a critical concept to minimize Federal estate tax liability. Additionally, Revenue Procedure 2025-28 is relevant for taxpayers seeking to amend their tax returns for taxable years 2022 through 2024 and claim a 100% full deduction of their “domestic research or experimental expenditures” in those taxable years.

The 2025 Tax Act – Key Business Tax Provisions

One key change for business taxpayers under the 2025 Tax Act concerns the tax treatment of “domestic research or experimental expenditures” (often also referred to as “U.S. R&D” costs). Also, the 2025 Tax Act permanently enacts into law the provision from the Tax Cuts and Jobs Act of 2017 that created the “qualified business income” deduction – generally allowing a 20% deduction with respect to the “qualified business income” from partnerships, S corporations, and sole proprietorships.

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The 2025 Tax Act – Key Individual Tax Provisions

Whether it is called by its popular name, the “One Big Beautiful Bill Act”, or by its official legal name, “An Act . . . To provide for reconciliation pursuant to title II of H. Con. Res. 14”, the legislation enacted by Congress on July 3, 2025 and signed into law by President Donald Trump on July 4, 2025 (the “2025 Tax Act”), will have a significant impact on taxpayers. This article describes the key individual tax provisions of the 2025 Tax Act.

“Related Party” Transactions

This article focuses on “related party” transactions under Internal Revenue Code Section 267(a)(1) and Internal Revenue Code Section 1239(a). While there is some overlap, it should be noted that the specific scope of “related parties” for purposes of a “related party” transaction under Internal Revenue Code Section 1239(a) is different than the specific scope of “related parties” under Internal Revenue Code Section 267(a)(1).

The Wash Sale Rule

A less well-known rule that can affect the tax deduction of losses from the sale of stock is the wash sale rule, enacted under Internal Revenue Code Section 1091. This article discusses the application of the wash sale rule.

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All Operating Agreements Are Not Created Equal

It has been stated that the limited liability company has become more popular than the corporation as the basic form of entity to do business in the United States. A critical document with any limited liability company is the operating agreement. When an operating agreement for a limited liability company fails to fully cover the six key issues described here in accordance with the understandings of the limited liability company’s members and managers and applicable law, such operating agreement is a poorly-drafted, inadequate operating agreement.

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President Trump’s “Gold Card” Immigration Proposal – Does it Provide a Viable Path to Obtain a Green Card?

President Trump announced a new immigration proposal – what he referred to as a “gold card”. The “gold card” green card program would potentially replace the existing EB-5 immigration program. Although it has been reported that the Trump administration may be considering combining the “gold card” green card proposal with the EB-5 investment program in some manner.

The SLAT – A Possible New Estate Tax Planning Technique for Married Couples

Effective estate tax planning often involves two competing objectives. On one hand, there is an objective to remove assets from a person’s taxable estate, so that estate tax liability can be reduced on such person’s death. On the other hand, there is an objective to retain the income and principal from a person’s assets, so that such person’s activities are not disrupted during such person’s lifetime.

The Continuing Saga of “BOIR/FinCEN” Reporting

With the Supreme Court’s decision to stay the “Texas Top Cop Shop December 3” injunction, the Supreme Court’s decision only related to the nationwide injunction issued in the Texas Top Cop Shop case; it did not at all relate to the nationwide injunction issued in the Smith case. As a result, as of January 24, 2025, the general advice remained that reporting companies that had not yet made filings with FinCEN to comply with the BOIR requirement of the CTA should hold off on doing so.

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