Accounting
Ending Chevron deference has implications for alternative investment firms
With its decision in
While neither of the cases is a tax case, the decision in Loper has broad implications for the tax regulations written and administered by the Department of the Treasury and the IRS as well as the agencies tasked with the regulation of the alternatives industry.
Under Chevron, the examination of regulations was subject to a two-step approach:
1. Determination of whether there is ambiguity in the statutory language, and if there is,
2. Whether the regulatory agency provided a permissible interpretation of the statute.
To the extent both conditions were met, agency interpretation of the statute would receive deference, even if the interpretation was not one that would have been reached by the courts. Over the years there has been a move toward making ambiguity in the statutory language a given, leaving the courts with the determination of the reasonableness of the interpretation by the agencies.
Loper intends to return the task of determining the best (as opposed to permissible) interpretation of the legislation to the courts. The Loper decision has the potential to have widespread implications for tax regulations and administration and provide opportunities for taxpayers, while creating a more uncertain regulatory environment. As it relates to tax provisions relevant for alternative investment firms, two could be specifically impacted.
Code Section 1061 was enacted by the Tax Cuts and Jobs Act of 2017 and is intended to limit carried interest earned by alternative funds managers taxed at preferential long-term rates to amounts earned from the sale of assets held for greater than three years. While simple on the surface, the details of getting the goal of the legislation accomplished are quite complex and were largely left to the regulations to work out.
One of the exceptions provided for in the Code, by Section 1061(c)(4)(A), is the exception for carried interest held by a corporation. On its surface, by the plain reading of the statute, the exception means provisions of Section 1061 should not apply to carried interest held by a corporation. However, Regulation Section 1.1061-3(b)(2)(i) was published to interpret Section 1061(c)(4)(A) and provides that the exception should not apply to a corporation that has made an election to be treated as an S corporation or a passive foreign investment company that has made a Qualified Electing Fund election.
While many commentators have expressed a view that exclusion of certain corporations from the definition of a corporation for purposes of Section 1061 by regulation is an overreach and is contrary to the plain reading of the statute, to date taxpayers have been reluctant to take positions contrary to the regulation or to litigate the matter. As with other positions taken contrary to regulation, taxpayers’ decisions with respect to the application of the Section 1061 regulations may need to be reexamined in light of the Loper decision. Without the same deference awarded to the Treasury’s interpretation of the legislative intent and the statute, the courts may take a broader view of what “corporation” means for purposes of Section 1061. And the government, for its part, may need to take legislative action if its true intent was to exclude certain corporations from the exception provided for in Section 1061.
The other area to watch with particular interest for alternative asset managers is the saga surrounding regulations under IRC Section 1402(a)(13). Broadly, Section 1402(a)(13) exempts income earned by limited partners from self-employment taxes. The exemption has been relied on by alternative asset managers, most commonly structured as limited partnerships, to exempt large portions of their net management fees from self-employment taxes. The struggle to define “limited partner” for purposes of Section 1402 has been undertaken by the Treasury when it issued proposed regulations in 1997 and by courts on numerous occasions, but most recently in the case of Soroban Capital Partners v. Commissioner.
The 1997 proposed regulations tried to provide a functional test to determine whether an individual was a limited partner for the purposes of Section 1402. These regulations were withdrawn after the Senate specifically expressed concerns that the proposed regulations exceed the regulatory authority of the Treasury and indicated that “Congress, not the Department of the Treasury or the Internal Revenue Service, should determine the tax law governing self-employment income for limited partners.”
In the Soroban case, the court has chosen to continue pursuing the functional analysis in determining whether limited partners in asset managers were limited partners for purposes of Section 1402(a)(13), most recently ruling that they were not. The IRS, however, has included regulation under Section 1402(a)(13) on its priority guidance plan for fiscal year 2023-2024. The year ended June 30, 2024, and the plan for 2024-2025 fiscal year has yet to be released, but if the self-employment for limited partners guidance remains on the priority guidance list, and the IRS in fact undertakes the task of providing regulations defining a limited partner, there could be tension between what impact the Loper and Soroban decisions would have on the direction the IRS takes in its rulemaking. It also can cause further confusion for the principals of asset management firms (as well as other service-type businesses operating as limited partnerships) and serve as a reminder to Congress that it indicated that the guidance on the matter should come from them.
While the Loper decision does not provide any clarity or guidance on the complicated and uncertain tax issues facing alternative asset firms, it might provide opportunities for taxpayers to refine and redefine their tax positions in cases where current or prospective tax regulations do not provide the best interpretation of the statute.
Jody Padar, an author and speaker known as “The Radical CPA,” and Katie Tolin, a growth strategist for CPAs, together launched a training and technology platform called XcelLabs.
XcelLabs provides solutions to help accountants use artificial technology fluently and strategically. The Pennsylvania Institute of CPAs and CPA Crossings joined with Padar and Tolin as strategic partners and investors.
“To reinvent the profession, we must start by training the professional who can then transform their firms,” Padar said in a statement. “By equipping people with data and insights that help them see things differently, they can provide better advice to their clients and firm.”
The platform includes XcelLabs Academy, a series of educational online courses on the basics of AI, being a better advisor, leadership and practice management; Navi, a proprietary tool that uses AI to help accountants turn unstructured data like emails, phone calls and meetings into insights; and training and consulting services. These offerings are currently in beta testing.
“Accountants know they need to be more advisory, but not everyone can figure out how to do it,” Tolin said in a statement. “Couple that with the fact that AI will be doing a lot of the lower-level work accountants do today, and we need to create that next level advisor now. By showing accountants how to unlock patterns in their actions and turn client conversations into emotionally intelligent advice, we can create the accounting professional of the future.”
“AI is transforming how CPAs work, and XcelLabs is focused on helping the profession evolve with it,” PICPA CEO Jennifer Cryder said in a statement. “At PICPA, we’re proud to support a mission that aligns so closely with ours: empowering firms to use AI not just for efficiency, but to drive growth, value and long-term relevance.”
The accountant the world urgently needs has evolved far beyond the traditional role we recognized just a few years ago.
The transformation of the accounting profession is not merely an anticipated change; it is a pressing reality that is currently shaping business decisions, academic programs and the expected contributions of professionals. Yet, in many areas, accounting education stubbornly clings to outdated, overly technical models that fail to connect with the actual demands of the market. We must confront a critical question: If we continue to train accountants solely to file tax reports, are we truly equipping them for the challenges of today’s world?
This shift in mindset extends beyond individual countries or educational systems; it is a global movement. The recent announcement of the
The CIMA/CGMA proposal for 2026 is not just a curriculum update; it is a powerful manifesto. This new program positions analytical thinking, strategic business partnering and technology application at the core of accounting education. It unequivocally highlights sustainability, aligning with IFRS S1 and S2, and expands the accountant’s responsibilities beyond mere numbers to encompass conscious leadership, environmental impact and corporate governance.
The current changes in the accounting profession underscore an urgent shift in expectations from both educators and employers. Today, companies of all sizes and industries demand accountants who can do far more than interpret balance sheets. They expect professionals who grasp the deeper context behind the numbers, identify inconsistencies, anticipate potential issues before they escalate into losses, and act decisively as a bridge between data and decision making.
To meet these expectations, a radical mindset shift is essential. There are firms still operating on autopilot, mindlessly repeating tasks with minimal critical analysis. Likewise, many academic programs continue to treat accounting as purely a technical discipline, disregarding the vital elements of reflection, strategy and behavioral insight. This outdated approach creates a significant mismatch. While the world forges ahead, parts of the accounting profession remain stuck in the past.
The consequences of this shift are already becoming evident. The demand for compliance, transparency and sustainability now applies not only to large corporations but also to small and mid-sized businesses. Many of these organizations rely on professionals ill-equipped to drive the necessary changes, putting both business performance and the reputation of the profession at risk.
The positive news is that accountants who are ready to thrive in this new era do not necessarily need additional degrees. What they truly need is a commitment to awareness, a dedication to continuous learning, and the courage to step beyond their comfort zones. The future of accounting is here, and it is firmly rooted in analytical, strategic and human-oriented perspectives. The 2026 curriculum is a clear indication of the changes underway. Those who fail to think critically and holistically will be left behind.
In contrast, accountants who see the big picture, understand the ripple effects of their decisions, and actively contribute to the financial and ethical health of organizations will undeniably remain indispensable, anywhere in the world.
Congressional Republicans are siding with Donald Trump in the messy divorce between the president and Elon Musk, an optimistic sign for eventual passage of a tax cut bill at the root of the two billionaires’ public feud.
Lawmakers are largely taking their cues from Trump and sticking by the $3 trillion bill at the center of the White House’s economic agenda. Musk, the biggest political donor of the 2024 cycle, has threatened to help primary anyone who votes for the legislation, but lawmakers are betting that staying in the president’s good graces is the safer path to political survival.
“The tax bill is not in jeopardy. We are going to deliver on that,” House Speaker Mike Johnson told reporters on Friday.
“I’ll tell you what — do not doubt, don’t second guess and do not challenge the President of the United States Donald Trump,” he added. “He is the leader of the party. He’s the most consequential political figure of our time.”
A fight between Trump and Musk exploded into public view this week. The sparring started with the tech titan calling the president’s tax bill a “disgusting abomination,” but quickly escalated to more personal attacks and Trump threatening to cancel all federal contracts and subsidies to Musk’s companies, such as Tesla Inc. and SpaceX which have benefitted from government ties.
Republicans on Capitol Hill, who had — until recently — publicly embraced Musk, said they weren’t swayed by the billionaire’s criticism that the bill cost too much. Lawmakers have refuted official estimates of the package, saying that the tax cuts for households, small businesses and politically important groups — including hospitality and hourly workers — will generate enough economic growth to offset the price tag.
“I don’t tell my friend Elon, I don’t argue with him about how to build rockets, and I wish he wouldn’t argue with me about how to craft legislation and pass it,” Johnson told CNBC earlier Friday.
House Budget Committee Chair Jodey Arrington told reporters that House lawmakers are focused on working with the Senate as it revises the bill to make sure the legislation has the political support in both chambers to make it to Trump’s desk for his signature.
“We move past the drama and we get the substance of what is needed to make the modest improvements that can be made,” he said.
House fiscal hawks said that they hadn’t changed their prior positions on the legislation based on Musk’s statements. They also said they agree with GOP leaders that there will be other chances to make further spending cuts outside the tax bill.
Representative Tom McClintock, a fiscal conservative, said “the bill will pass because it has to pass,” adding that both Musk and Trump needed to calm down. “They both need to take a nap,” he said.
Even some of the House bill’s most vociferous critics appeared resigned to its passage. Kentucky Representative Thomas Massie, who voted against the House version, predicted that despite Musk’s objections, the Senate will make only small changes.
“The speaker is right about one thing. This barely passed the House. If they muck with it too much in the Senate, it may not pass the House again,” he said.
Trump is pressuring lawmakers to move at breakneck speed to pass the tax-cut bill, demanding they vote on the bill before the July 4 holiday. The president has been quick to blast critics of the bill — including calling Senator Rand Paul
As the legislation worked its way through the House last month, Trump took to social media to criticize holdouts and invited undecided members to the White House to compel them to support the package. It passed by one vote.
Senate Majority Leader John Thune — who is planning to unveil his chamber’s version of the bill as soon as next week — said his timeline is unmoved by Musk.
“We are already pretty far down the trail,” he said.
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