Law Office of James Hastings

Tax Court Clarifies IRS Extension Rules, Treasury Targets ETF Strategies, and California Changes Collection Law

Tue, 06 Oct 2026 13:38:16 -0700

Tax Court limits Form 872-T, IRS targets ETF tax strategies, and California changes collection and historic rehabilitation credit rules.

Week ending October 2, 2026

This week produced two noteworthy published U.S. Tax Court opinions, a significant IRS attack on certain investment-fund tax strategies, new federal regulatory proposals, and two California enactments with practical consequences for tax controversy and real-estate planning. The distinctions in legal status matter: the Tax Court opinions are published regular opinions; the California bills have been enacted; Revenue Ruling 2026-20 states the IRS's current administrative position; and the new farmland and education-credit regulations remain proposed.

Tax Court: Form 872-T Cannot Cut Short a Fixed-Date Assessment Extension

In Fine v. Commissioner, 167 T.C. No. 13 (Sept. 30, 2026), the Tax Court addressed a deceptively important limitations issue. The taxpayers had signed Forms 872 agreeing to fixed dates through which the IRS could assess tax for 2015 and 2016. When Appeals negotiations later stalled, they submitted Forms 872-T in an attempt to terminate those extensions early.

The Court held that this does not work. Form 872-T is designed to terminate the open-ended extension created by Form 872-A, not a fixed-date Form 872. A taxpayer who has agreed to a date certain on Form 872 cannot unilaterally replace that date by sending a termination notice. Because the IRS mailed its notices of deficiency before the dates specified in the Forms 872, the notices were timely. Fine is a regular Tax Court opinion, not a memorandum opinion. Leagle

Why It Matters. Statute-extension requests are often treated as routine during...Read More

Weekly Tax Law Update: Tax Court Opens Door to Equitable Tolling, California Expands Film Credits, and IRS Seeks Opportunity Zone Guidance

Mon, 28 Sep 2026 10:24:58 -0700

Week of September 21, 2026

Several developments this week deserve attention from taxpayers and tax practitioners. The U.S. Tax Court issued an important precedential decision allowing equitable tolling of a partnership filing deadline, California enacted a new standalone post-production tax credit, the IRS requested additional guidance concerning the next generation of Opportunity Zones, and courts issued useful decisions concerning IRS mailing procedures and California local tax elections.

Tax Court Allows Equitable Tolling of the BBA Partnership Petition Deadline

The most significant federal tax decision of the week is Kings Road Property, LLC v. Commissioner, 167 T.C. No. 11 (Sept. 21, 2026).

Under the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015, a partnership generally has 90 days after the IRS mails a Final Partnership Adjustment to petition the Tax Court under Internal Revenue Code § 6234.

Kings Road filed its petition 16 days late.

Ordinarily, that might appear fatal. But the circumstances were unusual. The partnership’s counsel had been actively monitoring the examination and contacted the IRS to determine whether the Final Partnership Adjustment had been issued. IRS personnel advised counsel that it had not. In fact, the IRS had already mailed the notice, and the notice was later returned as undeliverable.

The Tax Court held that the § 6234(a) filing deadline is subject to equitable tolling and concluded that Kings Road had demonstrated both reasonable diligence and extraordinary circumstances sufficient to excuse the late filing.

Why It Matters

This is a precedential Tax Court opinion and an important development in partnership controversy.

It does not mean that taxpayers can routinely obtain relief from missed filing deadlines. Equitable tolling remains an extraordinary remedy. But Kings...Read More

The Supreme Court Ends Chevron Deference

Fri, 07 Mar 2025 15:15:49 -0800

In a historic ruling, the Supreme Court has overturned the Chevron deference doctrine in Loper Bright Enterprises v. Raimondo, a casethat could significantly alter the balance of power between federal agencies and the judiciary. The decision not only affects agency authority across various sectors but also has profound implications for clean energy taxprovisions under the Inflation Reduction Act (IRA).
The Case: Loper Bright Enterprises v. Raimondo
The case originated with Loper Bright Enterprises andother family-owned fishing companies that operate in the Atlantic herring fishery. These companies challenged a rule issued by the National Marine Fisheries Service (NMFS) under the Magnuson-Stevens Fishery Conservation and Management Act (MSA), which required them to pay for government-certifiedobservers on their vessels—an expense of up to $710 per day.
The fishing companies argued that the NMFS lacked statutory authority to impose this financial burden. However, the lower courts upheld the rule, relying on the Chevron deference doctrine, which allowed courts to defer to an agency’s reasonable interpretation of ambiguous laws.
The Supreme Court’s Decision: Overruling Chevron
In a major shift, the Supreme Court struck down Chevron deference, ruling that courts must independently interpret statutes rather than automatically defer to agency interpretations. The decision
emphasized that:
Judicial review must be independent—agencies no longer receive special deference in interpreting ambiguous laws.
Article III of the Constitution assigns courts, not agencies, the responsibility to interpret the law.
The Administrative Procedure Act (APA) requires courts to decide legal questions without assuming...Read More

The Inflation Reduction Act: A Game Changer for Clean Energy Tax Incentives

Fri, 07 Mar 2025 14:38:47 -0800

The Inflation Reduction Act: A Game Changer for Clean Energy Tax Incentives
The Inflation Reduction Act (IRA) of 2022 introduced sweeping changes to how clean energy tax credits are structured and monetized. As the largest climate investment in U.S. history, the IRA has injected billions into renewable energy, creating new opportunities—and challenges—for businesses, investors, and tax professionals.
At the heart of this transformation are two key provisions: Direct Pay (IRC §6417) and Transferability (IRC §6418). These mechanisms allow tax-exempt entities to receive cash payments for credits and enable businesses to sell tax credits for immediate liquidity. Understanding these changes is crucial for maximizing benefits while maintaining compliance.
What’s New: Tax Credits as Liquid Assets
Traditionally, monetizing clean energy tax credits required complex tax equity financing structures, limiting access to large corporations and financial institutions. The IRA has changed this:
Direct Pay (IRC §6417): Tax-exempt entities (e.g., nonprofits, municipalities, and rural electric cooperatives) can receive a cash refund from the IRS in place of nonrefundable tax credits. Some for-profit businesses, such as hydrogen and carbon capture projects, can also elect Direct Pay for up to five years.
Transferability (IRC §6418): Businesses that generate tax credits but don’t have enough tax liability can sell them to unrelated third parties for cash. The buyer can then apply the credits against their own tax bill, making tax credits a tradable commodity.
Why This Matters
For project developers, these provisions mean quicker access to capital. Instead of relying on traditional tax equity investors, companies can sell their...Read More

1099 Reporting for Insurance Settlements

Fri, 07 Mar 2025 12:22:38 -0800

"I am a plaintiff’s PI attorney, and I was doing some research and saw your
article regarding 1099’s. A colleague suggested to me that I include language in settlement agreements stating that the insurer should only issue a 1099 for the settlement amount to me, but not to the plaintiff. Your article states “both attorney and plaintiff receive 1099s for the entire settlement amount.” Do you know if this is still the case presently, and are you aware of insurers agreeing to only issue 1099’s to plaintiff’s counsel and not plaintiff?"
The1099 rules are different for different kinds of transactions. Payments to an attorney need to be reported on a 1099 whether or not the payment is income to the attorney (IRC Sec 6045). For litigation, this means the attorney gets a 1099 for the entire settlement amount even if only a portion of it accounts for legal fees. The attorney only needs to report the attorney’s fee portion as income on their tax return, however.
The second rule is reporting for payments to another person in the course of a trade or business. In this case, paying out claims is the insurance company’s business and the payment to the plaintiff needs to be reported at the gross amount (IRC 6041). If legal fees are paid separately, the attorney will receive a 1099 just for the amount paid directly to the attorney (IRC 6045).
Example 1: If a defendant issues a...Read More

Sparkfund Paves the Way for Individual Taxpayer Participation in Multi-Billion Dollar Inflation Reduction Act Tax Credit Market

Mon, 30 Sep 2024 11:01:17 -0700

By connecting distributed energy projects with companies and individual taxpayers, Sparkfund and its partner Secured Carbon are unlocking discounted green investments for investors
Businesswire September 19, 2024 05:45 AM Eastern Daylight Time
WASHINGTON--(BUSINESS WIRE)--Sparkfund, a leading energy transition partner specializing in program management, financing, and implementation services for utilities and building owners, today announced the company’s sale of Inflation Reduction Act (IRA) investment tax credits (ITC), valued at a quarter of a million dollars, to an individual taxpayer. Sparkfund partnered with Secured Carbon to qualify and transfer a bundle of...Read More

James Hastings Joins Secured Carbon as Director of Tax Strategies

Sun, 19 May 2024 09:33:20 -0700

Press Release: James Hastings Joins Secured Carbon as Director of Tax Strategies
FOR IMMEDIATE RELEASE
San Francisco, CA – May 1, 2024 – Secured Carbon is pleased to announce that James Hastings has accepted the position of Director of Tax Strategies, effective immediately. Hastings, who has been an advisor to the company since 2022, brings a wealth of experience in tax law and strategy to this executive role.
Secured Carbon is at the forefront of clean energy andcarbon reduction initiatives. The company specializes in automated tax creditvalidation, origination, and transfer, facilitating the buying and selling of IRA Clean Energy Tax Credits. Secured Carbon ensures compliance and maximizes the financial benefits for businesses engaged in sustainable practices.
James Hastings has an extensive background in tax law, having founded the Law Office of James Hastings, which has served clients with expert legal and financial advice for over a decade. The firm is renowned for its specialization in tax law, providing comprehensive services that include tax planning, regulatory compliance, and legal advisory. Hastings' career is marked by his commitment to excellence and his innovative approach to complex tax issues.
"This is an exciting opportunity to work at the intersection of new tax law and legal-tech with a team of proven startup founders," said Hastings. "I am thrilled to join Secured Carbon and contribute to their mission of driving sustainable economic growth through...Read More

Part III: Transferring LLC Membership Interests

Mon, 05 Jun 2023 10:30:02 -0700

An involuntary transfer of an LLC membership interest is just that—a transfer prompted by a creditor action or the occurrence of a triggering event outside of the member’s control. An individual or entity obtaining a membership interest as a result of an involuntary transfer usually cannot fully step into
the shoes of the transferring member.
This statutory protection—often called a pick your partner provision—acts as a safeguard that provides LLC members with a certain amount of personal asset protection. For example, whereas the creditor of a corporate shareholder could reach and exercise shareholder rights to their full extent, the creditor of an LLC member can reach and exercise only the economic rights associated with membership interests—not the voting or management rights. The recipient of this type of membership interest is called an assignee.
StatutoryProvisions – Creditor Action
If an LLC does not specify any transfer provisions, creditor actions are subject to state LLC laws. Each state, in its LLC statute, has provisions limiting what actions a creditor can take against an LLC member for personal debt. Depending on the state, the statutory remedies available to an LLC member’s personal creditors may include:
A charging order, which is a court order requiring the LLC to pay all the distributions due to the member-debtor from the LLC to the creditor.
A foreclosure on the member-debtor’s LLC ownership interest.
A court order to dissolve the LLC.
These remedies protect the other LLC...Read More

Part II: Transfering LLC Membership Interests

Mon, 29 May 2023 10:30:08 -0700

An LLC affords its members a certain amount of personal asset protection. Part of this protection hinges on the restricted transferability of LLC membership interests. Restricted transferability protects the non-transferring members from creditors and unwelcome new members, which upholds the integrity and value of the non-transferring members’ membership interests.
Most (but not all) LLCs impose requirements or restrictions on the transfer of a member’s interest. If the LLC’s operating agreement is silent on the transferability of interests, you must look to state law to be
sure there are no default provisions restricting transferability.
This article, part 2 in a 3-part series, focuses on voluntary membership interest transfers done with the intent to grant full membership rights to the recipient.
Step 1 – Determine theTransfer Process
The LLC's operating agreement should specify the process for transferring a membership interest. If the LLC has a buy-sell agreement in place, that must also be consulted.
Find the provisions that detail allowable transfers, the steps to complete them, and the method for calculating the value of the membership interest, if any.
The membership interests may be freely transferable but are likely subject to restrictions set forth in the
operating agreement, the buy-sell agreement, or by state law.
Some transfers may be permitted without prior approval of the other members, such as transfers to a member’s immediate family or to a trust for the benefit of a member or a member’s immediate family.
The LLC or the other members may have a right of first refusal before a transfer can be made.
If the operating agreement or buy-sell agreement doesn't specify the process for transferring a membership interest, you...Read More

Senators Urged to Amend Sec. 7502(c)

Wed, 24 May 2023 10:00:07 -0700

Update to 'The Mailbox Rule in 2023' posted May 5.

The American Institute of CPAs (the AICPA) is lobbying congress to amend the tax code to allow tax documents to be deemed submitted when transmitted rather than when received and processed by the IRS.
Currently, IRC 7502 states that items submitted to the IRS 'shall be deemed to [have been submitted on] the date of delivery or the date of payment'. It requires a postmark date before the prescribed deadline. This is the so-called 'Mailbox Rule'.
However, in a recent tax court case, the court held that Sec 7502 only applied to physically mailed objects and that electronic submissions were deem filed when received. In this case, the taxpayer submitted documents at 11:05pm local time on the last day to file a petition. The court rejected the petition as untimely because it was submitted at 12:05pm in Washington DC, where the tax court is located.
Recognizing the irreversible trend to electronic processes and procedures, the National Taxpayer Advocate urged congress to modernize the IRS and allow the Department of the Treasury to apply the mailbox rule to electronic payments and filings. The AICPA followed up on this recommendation with letters to Senators Marsha Blackburn (R-TN) and Catherine Cortez Masto (D-NV) expressing strong support for the change. Both Senators serve on the Senate Finance Committee.

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