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Tax News
ILM 201436049: An Unknown Hedge Fund Gets a Self-Employment Tax Slap from the IRS
ILM 201436049: An Unknown Hedge Fund Gets a Self-Employment Tax Slap from the IRS
Apparently some investment funds continue to take the position that their 2% service fee income is exempt from the self-employment tax (“SET”) under the “limited partner” exception of Sec. 1402(a)(13). These positions are often based on advice by counsel that there is a material distinction among an LLC, LP and LLP when it comes to this issue. I have reasoned here that in light of the proposed regulations and the Renkemeyer decision, these arguments are rather aggressive.  In the above-quoted ILM, the IRS tacitly seems to disagree with the view that the type of entity matters as...
September 08, 2014 read more
NEWT Act Reintroduced
NEWT Act Reintroduced
For those who keep up with the net investment income tax (NIIT) and the S-corporation planning touted by many practitioners as a solution for minimizing both NIIT and employment tax, here is a fresh news to keep in mind.  The Narrowing Exceptions for Withholding Taxes Act of 2013, or so called NEWT Act (purportedly named after former House Speaker Newt Gingrich) was reintroduced in the House this January 22 by Charles Rangel.  This Bill is not new. It was also introduced in the 112th Congress and even prior to that with the American Jobs and Closing Tax Loopholes Act of 2010 (Sec. 413 of...
February 01, 2013 read more
May investment managers rely on proposed regulations after the Renkemeyer decision, and does Renkemeyer really matter?
May investment managers rely on proposed regulations after the Renkemeyer decision, and does Renkemeyer really matter?
As many may know, May is the time when the Tax Section of the ABA meets for its semi-annual meeting (usually in DC). Often there are excellent discussions and observations that are worth noting. This one has to do with the Renkemeyer case that Matt covered here when the Tax Court decision first came out.  Apparently, as reported by Shamik Trivedi of TNT, the decision was a topic at the Partnership and LLCs session of the meeting. I did not attend this meeting, but judging by the report, it seems that some practitioners were concerned, and read Renkemeyer to suggest that taxpayers cannot...
May 11, 2011 read more
Tax Court: LLP Partners Did Not Qualify for Limited Partner Exception to Self-Employment Tax
Tax Court: LLP Partners Did Not Qualify for Limited Partner Exception to Self-Employment Tax
A recent Tax Court opinion held that the "limited partner" exception to liability for self-employment tax ("SET") found in IRC Section 1402(a)(13) did not apply to the partners of a Kansas limited liability partnership, which was operated as a law firm specializing in, you guessed it, Federal income tax law.  The opinion--Renkenmeyer, Cambell & Weaver, LLP v. Commissioner, 136 T.C. No. 7 (February 9, 2011)-- is noteworthy both to interest holders in "newer" entities such as LLPs, LLLPs, and LLCs, and also to old-fashioned limited partners.The prevailing view among practitioners...
March 15, 2011 read more