Tax Rules Address Estate Filings, Foreign Gifts, and Car Loan Interest

A newsletter published May 23, 2026, discusses tax obligations that arise after death, including final income tax returns, estate or trust returns, and questions about income in respect of a decedent. Federal estate tax exemption stands at $15 million per person for 2026. State estate taxes, inheritance taxes, and probate costs can still apply depending on location and asset value.

Foreign Gift Reporting In Zhang v.

U.S. tax resident received about $287,000 in wedding gifts from family in China. Failure to file Form 3520 for gifts exceeding $100,000 resulted in a penalty even though no tax was owed on the gifts. The court ruled the IRS can assess those penalties administratively. The taxpayer may still argue reasonable cause, including reliance on tax software.

A reader asked whether interest paid on a loan from parents for a new car qualifies for a temporary deduction created by OBBBA. The deduction applies to qualifying new personal-use vehicles assembled in the United States for tax years 2025 through 2028, with a $10,000 cap and phaseout above $100,000 modified adjusted gross income for single filers.

Under proposed IRS rules, loans from related parties do not qualify. Parents receiving interest may need to report it as taxable income.

Tax Court Procedures The U.S.

Tax Court hears disputes between taxpayers and the IRS before the disputed tax is paid. Taxpayers generally have 90 days, or 150 days if outside the United States, to file a petition after receiving a notice of deficiency. Cases involving $50,000 or less per year may use simplified small tax case procedures that cannot be appealed and do not create precedent.