Newsletter

March 2026
Brutal IRS Trap Wipes Out Goodwill Clothing Deductions
If you donate clothing or household goods to charity, there’s an IRS trap you need to know about.
In a recent Tax Court case, a taxpayer lost a $6,760 charitable deduction—not because the donations were improper, but because his documentation failed to meet strict technical requirements. The court didn’t question his generosity. It denied the deduction because the receipts and Form 8283 were incomplete.
Here’s the key issue: For non-cash donations over $250, you must obtain a contemporaneous written acknowledgment from the charity. For donations over $500, you must also maintain detailed records showing what you donated, when you acquired the items, and their cost or basis. Form 8283 must be completed accurately, including donation dates and fair market values.
Generic receipts that say “miscellaneous household items” are not enough. And once an audit begins, you cannot fix missing documentation afterward. The deduction is simply lost.
The safest approach is proactive. Before donating, prepare a detailed list of items, including descriptions and estimated values; take photographs; and provide the list to the charity so it can reference the list in its acknowledgment. Keep all supporting records with your tax files.
The bottom line: Good intentions are not sufficient. With charitable deductions, documentation is everything.
SE Rules for Converting a Business Vehicle to Personal Use
If you are a sole proprietor and considering converting a business vehicle to personal use, it’s important to understand the tax consequences before making the switch.
While the conversion itself may appear simple, the tax impact can arise either immediately or later—and sometimes in unexpected ways.
If you used the IRS standard mileage rate for the business vehicle, the conversion to personal use is generally not a taxable event. But depreciation is built into each mileage deduction (for example, 35 cents of the 72.5-cent 2026 rate counts as depreciation).
When you later sell the vehicle, you must calculate a gain or loss based on the vehicle’s adjusted business basis. Many taxpayers overlook the fact that a deductible business loss may still be available years after conversion. Importantly, only the business portion of the loss is deductible, and any gain attributable to the business portion is taxable.
By contrast, if you used the actual expense method—especially with bonus depreciation or Section 179 expensing—the rules are less forgiving. A drop in business use to 50 percent or less triggers Section 280F recapture immediately.
This requires you to recompute depreciation using the straight-line method and pay tax on any excess previously deducted. Later, when you sell the vehicle, you must again calculate gain or loss based on the adjusted basis. In these cases, converting the vehicle creates a two-step tax consequence: recapture now, and potential gain or loss later.
One final caution: selling the vehicle to a related party (such as a spouse, parent, child, or sibling, or a corporation you control) can permanently disallow a loss deduction. To preserve potential tax benefits, make your sale to an unrelated third party.
How a $7,970 Tax Case Cost the IRS an Extra $34,081
Fighting the IRS can be extremely time-consuming and expensive. But if you prevail against the IRS, it is possible to get the court to make an award of attorney fees so you don’t have to pay them all out of your own pocket.
It’s not easy to get a court to award attorney fees against the IRS. Ordinarily, you must not only win your case, but also show that the IRS’s position was not “substantially justified”—something that is very hard to do in most cases.
But there is a way to get around the substantially justified requirement: make a “qualified offer” to the IRS. This is an offer to settle the case for a specified amount. When you do this, you can get an award of attorney fees if you ultimately prevail in the case—that is, if the IRS’s final result is no better than your offer.
You can make a qualified offer
during the IRS examination (audit) after a 30-day letter,
while the case is being appealed,
after filing a Tax Court petition,
during Tax Court litigation, or
in a refund suit in the district court or the Court of Federal Claims.

A recent Tax Court case shows how powerful a qualified offer can be.
Crystal Greenwald claimed a $5,920 earned income tax credit and a $2,050 additional child tax credit on her tax return. When the IRS denied the credits because she couldn’t prove the children involved lived with her for more than six months during the year, she appealed to the IRS Office of Appeals. Her attorney made a qualified offer to the office for the full amount of the credits.
Appeals disregarded the offer—apparently because it was misplaced—but ultimately chose to pay Crystal the credits rather than continue the dispute in district court.
Because her attorney had made a valid qualified offer and Crystal ultimately prevailed, the district court awarded her $34,081 in attorney fees. She was not required to prove that the IRS’s position lacked substantial justification—something she likely could not have established, since she never provided evidence that her children lived with her for more than six months.
Most IRS cases settle, so even with a qualified offer, you can’t get attorney fees following a settlement unless you show that the IRS’s position was not substantially justified (which is very difficult to show). Even so, making a qualified offer is worthwhile because it encourages the IRS to settle, knowing it could be on the hook for attorney fees if it doesn’t settle and loses the case.
Despite these benefits, taxpayers underuse qualified offers.
How One-Owner Businesses Win with the New 50% Childcare Credit
Beginning in 2026, the One Big Beautiful Bill Act increases the employer childcare credit for small businesses to 50 percent of qualified expenses, up to $600,000 per year. Even one-owner businesses can benefit—and the savings are substantial.
If you operate as a sole proprietor, you cannot claim the credit for your own childcare because you are not an employee. But if you hire your spouse as a legitimate W-2 employee, your business qualifies.
For example, on $20,000 in childcare expenses, the 50 percent credit results in a $10,000 dollar-for-dollar tax reduction. The remaining $10,000 is deductible, producing additional tax savings. After your spouse pays tax on the wages, the household comes out thousands of dollars ahead.
Solo S corporation owner-employees also win. Although a more-than-5-percent owner must include the childcare benefit in W-2 wages, the combination of the 50 percent credit plus the deduction outweighs taxes paid on wage inclusion, resulting in thousands in savings.
The key driver is the 50 percent credit. When paired with a deduction for the remaining expense, the math is strongly favorable, despite the benefit being taxable.
Late Filing Costs Estate $1.5M—Will Yours Be Next?
With today’s $15 million federal estate and gift tax exemption ($30 million for married couples), it’s easy to believe estate tax planning is no longer a concern. But a recent Tax Court case proves otherwise—an estate lost $1.5 million simply because a portability election was not properly and timely filed.
Here’s the key issue: When the first spouse dies, any unused estate tax exemption can be transferred to the surviving spouse—but only if the executor files a timely and properly completed Form 706 and elects portability. This is true even when no estate tax is owed.
Why does this matter? Because circumstances change. A surviving spouse’s assets may grow significantly due to business success, investments, inheritance, or even future changes in the law that reduce the exemption amount.
Without the portability election, the unused exemption is permanently lost.
With it, the surviving spouse may preserve millions of dollars in additional tax-free protection.
The filing deadline is generally nine months after death (with a six-month extension available). Even estates below the filing threshold can use a simplified Form 706 if the sole purpose is to elect portability. But if the return is not properly filed within the allowable window, the opportunity disappears forever.
The lesson is simple: if you are married, make sure your executor understands the importance of filing Form 706 and electing portability—no matter how modest the estate may seem today.
$12,000 Door Replacement: Repair or 39-Year Asset?
When a five-figure commercial building expense hits your desk, the first question is simple: Can you deduct it, or must you depreciate it over 39 years?
Consider a recent example. An office building owner replaced a failed sliding glass door and frame at a total cost of $12,000, including removal and installation. The new unit was the same brand, size, and quality as the old one. No upgrades. No redesign. No expansion.
Under the tax rules, expenses must be capitalized if they result in a betterment, an adaptation to a new or different use, or a restoration—the so-called BAR tests. Replacing a door with one of the same type and quality, without improving the building overall, does not clearly meet the capitalization tests. In situations like this, the strongest technical position is often to deduct the full amount as a repair under Section 162 of the tax code.
That said, conservative taxpayers may prefer to capitalize the cost. If you take that route, you must capitalize the entire $12,000—including installation—and depreciate it over 39 years. The good news: you may also elect a partial disposition and deduct the remaining basis of the old door, which can produce a meaningful current write-off.
The key takeaway? Not every expensive building cost is a capital improvement. The tax result depends on the nature and scope of the work—not on the price tag.

TurboTax Negativity: What’s Driving the Backlash (2021–2026)

Over the last several filing seasons, many taxpayers have grown more frustrated with the end-to-end tax experience—often directing that frustration at consumer tax software (including TurboTax) when things go wrong. The negativity typically clusters around three themes: (1) delays and errors when the IRS must handle paper or manual processes, (2) “black box” customer-service experiences (especially bots), and (3) heightened fear of fraud and identity theft that can derail refunds and create long cleanup timelines.

In 2025-2026, lawsuits against Intuit’s TurboTax involve allegations of fraudulent tax returns filed using stolen consumer data, and deceptive “free” filing marketing. Key actions include investigations into security lapses that allowed unauthorized users to access accounts and file fake returns, as well as ongoing scrutiny regarding data sharing practices and misrepresentations of free filing services.

Data Breach & Fraud Allegations (2025-2026): A proposed class action lawsuit filed in July 2025 alleges TurboTax ignored security lapses, allowing hackers to file fraudulent returns using customer data. This follows a 2024 breach where personal information (names, SSNs, financial details) was accessed between Dec 2023 and Feb 2024.
“Free” Filing Settlement & Marketing Lawsuits: A $141 million settlement was reached with state Attorneys General regarding deceptive, paid-service advertising for low-income taxpayers.

While this case focused on 2016-2018, FTC litigation against Intuit regarding misleading ads continued into 2024, with similar, related claims in 2025

Data Privacy Claims: Lawsuits have alleged that TurboTax shared sensitive data with third parties like Facebook without user consent, alongside investigations into data tracking tools.
Arbitration & Class Actions: Some disputes are moving through private arbitration regarding data breaches.

1) Service friction is rising—especially when anything goes “non-standard”

Even when e-filing works smoothly, the moment a return gets kicked into manual handling (original paper returns, amended returns, or correspondence), the system slows down—and taxpayers often blame the tools they used to file, even if the delay sits downstream at the IRS.

The National Taxpayer Advocate has warned that paper processing and outdated technology increase refund delays and correspondence wait times, and can also create transcription errors that trigger additional back-and-forth to fix. The IRS is pushing a “Zero Paper” approach, but modernization remains a longstanding challenge.

2) Customer support complaints (including “bots”) add fuel to the narrative

A major driver of negativity is that taxpayers feel trapped between software support and the IRS—especially when they can’t reach a human quickly or get a clear resolution.

The Taxpayer Advocate report notes taxpayers were generally not satisfied with IRS voicebots, with only about half finding the “Where’s My Refund?” bot helpful and 40% finding the “Where’s My Amended Return?” bot helpful and recommends measuring “first contact resolution” across phone lines.

Why this matters for TurboTax perception: when a taxpayer files with TurboTax and then can’t get clear answers from IRS channels, the overall experience is often remembered as “TurboTax messed up,” even when the root cause is a downstream IRS processing or communication bottleneck.

3) The Dave Ramsey YouTube video (from ~3 years ago)

About three years ago, a Dave Ramsey YouTube segment circulated criticizing tax preparation quality and return errors—feeding the broader online narrative that consumer filing can go off the rails and that taxpayers may be better served with more support or review. (Referenced in our files as a YouTube video text script.)

4) “Court issues” and legal-process pain points (last ~5 years)

While the public often talks about “lawsuits” and “court battles” in the tax space, one of the most concrete, taxpayer-impacting legal frictions highlighted recently is where taxpayers are allowed to litigate—particularly refund disputes.

The National Taxpayer Advocate has repeatedly emphasized that taxpayers who seek a refund after paying the tax generally must sue in U.S. district court or the Court of Federal Claims, which is typically more burdensome than Tax Court (higher filing costs, more complex procedure, judges not always tax-specialized). TAS recommends expanding Tax Court jurisdiction to hear refund cases, noting that the current structure can effectively deprive many taxpayers of meaningful judicial review.

5) Fraud risk: how a data breach can turn into a fraudulent tax return

A separate but increasingly loud source of negativity is fear of identity-based tax fraud—especially as data breaches proliferate.

The IRS explains that a data breach can expose personally identifiable information, and that tax-related identity theft occurs when someone uses a victim’s Social Security number to file a false return claiming a fraudulent refund.

The broader security landscape makes this feel “easy” to victims because:

· Stolen data can be used for multiple crimes, including filing fraudulent tax returns, costing victims time and money to resolve.

· Identity thieves are adaptive and organized; the ecosystem impact includes direct harm to victims and erosion of trust.

· For businesses, the IRS lists practical “red flags,” such as being unable to e-file because a return was already filed under the same EIN/SSN, or receiving unexpected IRS transcripts/notices.

How easy is it to commit IRS fraud with your data? 60 Minutes Explained it over a decade ago on National TV, and the tactics can still work today! https://taxsaversllc.box.com/shared/static/rwqzq1rg0ume4hkr0i127s04ongjpny9.mp4

This months Guest Commentator is Bill Bonner:

Sunday, March 15, 2026

Bill Bonner, from Youghal, Ireland

At the end of the week came disheartening news. Associated Press:

Oil and gas prices rapidly rise as the Iran war shows no signs of letting up.

The price of oil surged higher and showed no signs of halting its rapid climb a week after the U.S. and Israel launched major attacks on Iran that escalated into a war in the Middle East. Oil prices surpassed $90 a barrel Friday, with American crude settling at $90.90, up 36% from a week ago…

And more from Associated Press:

Friday’s employment report showed job losses of 92,000 in February. The January and December figures were revised downward, with December swinging to a loss of 17,000 jobs…Without the health care sector, the economy would have shed roughly 202,000 jobs since Trump became president in January 2025.

The economic outlook is worsening. But who can worry about employment and gas prices when we’re in a shooting war?

Besides, won’t the war get things moving again?

Alas, one of the oldest and most durable delusions in economics is what Frederic Bastiat called ‘the broken window fallacy.’ It claims that bad things are good things because they animate the economy. Somebody sells a new piece of glass. Somebody puts it in place. Everyone gets paid and the economy booms. Even today, many people believe WWII spending is what ended the Great Depression… and that wars are ‘good for the economy.’

It’s called a ‘fallacy’ because it’s not true.

If bad things made a good economy, Iran would now be getting rich. The US and Israel are now breaking a lot of windows. And spending a lot on weapons to do it. In Iran, huge amounts of money and energy will be needed to bury the dead, fix the broken windows, and rebuild bombed out hospitals. And in America, resources that would otherwise be used for normal living expenses are being diverted to paying for bombs, missiles, and aviation fuel. In both countries, capital and labor—earmarked for other things by other people—are shanghaied by the feds and put to a use that only a few malign crackpots want.

(Some free strategic advice to the malign crackpots in Iran: You’re not going to win this fight. Wave the white flag and let the malign crackpots in the US choose some CIA stooge as Supreme Leader. Better to live on your knees than die on your feet; you can stand up later.)

The costs pile up with the bodies. Maryland senator, Chris Van Hollen:

Trump is already spending $1 BILLION PER DAY on his illegal regime change war of choice in Iran. Now, he’s going to ask Congress to give him up to $50 BILLION MORE. My vote: hell NO.

But all of this disgraceful brouhaha—the teen-aged corpses…the flattened buildings…the smoke… the planes… the explosions—these ‘costs’ are just the obvious and inevitable wages of war. ‘Second order’ and ‘third order’ effects come later; less predictable and, for the aggressor, often much less welcome.

And they have a way of sneaking up on you. All very well, says Senator John Kennedy, to celebrate America’s great military victories… but…

‘The American people want us to focus on making their life better and making their life more affordable; not getting involved in another endless war in the Middle East that is going to end in failure…This administration somehow found the resources, has found billions of dollars for bombs, but can’t find any money to actually bring down the high cost of living here in the United States of America.’

Marjory Taylor Green adds:

‘Most American taxpayers will never receive a Social Security check because it will be bankrupt by 2033. Most Americans can’t afford health insurance policies because they are so expensive. Most American families cannot financially survive on a single income, and both parents have to work like slaves in order to feed their children and keep a roof over their heads. But the Trump administration has decided that these American taxpayers have to spend $1 billion a day to murder people and their children in a foreign country that none of us have ever met and know nothing about. Incredible MAGA priorities.’

While the ‘gain’ from war may be delusional the costs must still be paid. In the US, they are paid in dollars. So, as the economy shifts to supply war material, it ends up with more dollars…and fewer things people actually want to buy. Prices rise.

They are already moving up. Wolf Richter:

Manufacturers reported that the costs of health insurance for employees shot up by 14.2% on average; service firms reported an average increase of 12.9%, according to a report by the New York Fed based on a survey of companies in the New York-Northern New Jersey region.

Manufacturers and service firms both reported that the costs of utilities jumped by about 8.5% on average. About one-fifth of the companies reported increases of 20% or more. “Indeed, sharply rising utilities costs in some areas have been tied to the explosive growth of AI-related data centers,” the report said.

The report also showed business insurance costs up by 7.4%…raw materials up 8%…and the average annual for an employee-sponsored family health insurance plan rose to $27,000.

Service firms and manufacturing companies saw similar cost increases. Both had suffered 5% increases in 2024. Then, the service companies overall costs rose 7% in 2025; 8.5% for the manufacturers.

Wages, meanwhile, rose only by 3.4%.

Even before the war began, Americans were getting poorer. As expected, Donald Trump is not changing direction… he is just speeding up.

But, the first order effects…or even just the second or third order economic effects are merely an unfinished sentence. There are also fourth and fifth order stains… the kind that you can’t wash away in a tide of paper money.

Regards,

Bill Bonner

P.S. The above article was originally published by Bonner Private Research. To read more from Bill Bonner and his team, as they track the unraveling of the “rules-based order”—and what it means for gold, the dollar, and America’s financial future—sign up here for their daily dose of insight, irreverence, and hard-earned perspective.

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