Tax Brief Issue 3: IRS Updates: Wagering Losses, Info Reporting, Opportunity Zones

01. Wagering loss cap and §6041 reporting thresholds

• OBBBA §70114(a) amended IRC §165(d) to cap the wagering-loss deduction at the lesser of 90% of losses or gains from wagering transactions, for taxable years beginning after December 31, 2025; REG-113229-25 conforms §1.165-10 to this statutory change.
• OBBBA §70433 raised the §6041, §6041A, and §3406 backup-withholding thresholds from $600 to $2,000 for payments made after December 31, 2025; the $2,000 base applies for calendar year 2026 and is indexed for inflation thereafter under §6041(h).

Source: IRS Internal Revenue Bulletin · 2026-05-04

02. QOZ nominations: contiguous-tract rule and Puerto Rico repeal

• Rev. Proc. 2026-14 implements OBBBA §70421(b)(2): for QOZ nominations after July 4, 2025, the prior contiguous-tract rule under §1400Z-1(e) is eliminated, so tracts must independently qualify as LICs; State CEOs have until October 28, 2026 (with the 30-day extension) to nominate tracts for the QOZ designation period beginning January 1, 2027.
• OBBBA §70421(a)(3) repeals the Puerto Rico special rule (former §1400Z-1(b)(3)) effective December 31, 2026; from that date the Governor of Puerto Rico nominates under the standard §1400Z-1 process subject to the 25% cap, while existing Puerto Rico QOZs remain designated through December 31, 2027.

Source: IRS Internal Revenue Bulletin · 2026-05-11

03. PLR 201949002 revoked: §48 ITC under reconsideration

• PLR 202619016 revokes PLR 201949002 (dated June 6, 2019), which had addressed additional §48 investment tax credits resulting from a change in accounting method, because the Service is reconsidering its position.
• Pursuant to §7805(b) and section 11.06 of Rev. Proc. 2026-1, the revocation is not applied retroactively to the original taxpayer; other taxpayers cannot have relied on the PLR as precedent under §6110(k)(3).

Source: IRS Written Determinations · 2026-05-08

04. §754 late election relief: retroactive basis adjustment

• Under §301.9100-3, the IRS granted a partnership 120 days from the date of the ruling to make a late §754 election; the ruling is contingent on basis adjustments under §734(b) or §743(b) being computed as if the election had been timely made, even for closed years, with deductions flowing only into still-open years and partner outside-basis reduced in parallel.
• If the partnership must file an Administrative Adjustment Request (AAR) to amend a prior return, the relief is further contingent on filing Form 1065-X or Form 8082 and taking the adjustments into account as required by §6227(b).

Source: IRS Written Determinations · 2026-05-08

05. 9100 relief for missing Form 3115 attachment

• A partnership's CPA timely mailed the duplicate Form 3115 (for a §263A automatic accounting-method change under Rev. Proc. 2015-13) and timely e-filed the return, but inadvertently failed to upload the original Form 3115 as an attachment to the e-filed return.
• Under §301.9100-3, the IRS granted 45 calendar days from the date of the ruling to file the original Form 3115 (identical to the duplicate), conditioned on the taxpayer acting reasonably and in good faith with no prejudice to the Government.

Source: IRS Written Determinations · 2026-05-08