News & Analysis as of

Self-Employment Tax Internal Revenue Service

Self-Employment Tax, LLCs, & The “Limited Partner” Exclusion

by Farrell Fritz, P.C. on

In general, self-employed individuals are subject to employment taxes on their net earnings. The wages paid to individuals who are non-owner-employees of a business are also subject to employment taxes, regardless of how...more

Tax court finds self-employment tax for active LLC member

by Thompson Coburn LLP on

Self-employment (SE) tax is one of the driving forces when a tax advisor recommends what type of entity to use for one’s business. My previous post, “Tax court finds no self-employment tax for passive LLC member,” described...more

Using an S corporation to avoid self-employment tax

by Thompson Coburn LLP on

Our last post discussed self-employment (SE) tax and taxpayers’ efforts to avoid that tax when using an entity taxed as a partnership to conduct business. It concluded that a limited partnership that conducted business...more

[Webinar] Self-Employment Tax and LLCs; New Partnership Audit Rules; Selected Issues from Heckerling - Jan. 24th, 12:00pm CT

by Thompson Coburn LLP on

In the webinar we will analyze a recent IRS memo delineating between when it will and will not respect efforts to make a member of an LLC subject to self-employment tax. We will become sensitized to how upcoming partnership...more

Franchisee’s & Self-Employment Taxes

by Dickinson Wright on

In a recent Chief Counsel Advice (CCA 201640014, issued 9/30/2016), the Office of Chief Counsel (“OCC”) of the Internal Revenue Service found that all of a franchisee’s share of earnings from a partnership that operating...more

MoFo Tax Talk - Volume 9, No. 2

by Morrison & Foerster LLP on

Editor's Note - Welcome to Tax Talk 9.02. By this fall, we may look back on Q2 2016 with some nostalgia. Of course, there is the U.S. presidential election on November 8th, but U.S. tax advisors right now are more...more

Individuals Granted Profits Interests Are Treated as Partners, Not Employees

by Reed Smith on

The Internal Revenue Service (the “IRS”) issued temporary and final regulations, effective May 4, 2016, clarifying the employment tax treatment of partners in a partnership that owns a disregarded entity (the “Final...more

About Pink Cadillacs and SECA Taxes

by Jackson Walker on

Peterson v. Commissioner is a case that only a tax person could enjoy. It is a new opinion from the 11th Circuit, decided on May 24, 2016. The court’s opinion is 87 pages long and includes a strong dissent on the majority’s...more

IRS Clarifies that Indirect Owners of Disregarded Entities Are Liable for Self-Employment Tax

by Miles & Stockbridge P.C. on

The IRS recently released temporary regulations clarifying that an employee of a disregarded entity is liable for self-employment tax if the employee is a partner in the partnership that owns the disregarded entity. See...more

New IRS Regulations Subject Certain Partners to Self-Employment Taxes

by Proskauer - Tax Talks on

On May 3, 2016, the U.S. Department of the Treasury issued new temporary and proposed regulations (Temp. Treas. Reg § 301.7701-2T) addressing the tax treatment of partners of a partnership that is the sole owner of an entity...more

Employee Benefits Advisory: IRS Issues Rules Clarifying the Self-Employment Tax Treatment of Partners – Possible Impact on...

by Sherman & Howard L.L.C. on

In new regulations issued on May 4, 2016, the IRS clarified that partners in a partnership (including members of a limited liability company that is taxed as a partnership) that owns a subsidiary that is a disregarded entity...more

IRS Releases Final and Temporary Regulations on Self-Employment Tax Rules

by White & Case LLP on

Earlier this month, the Internal Revenue Service (the "IRS" or "Agency") released final and temporary regulations (the "Regulations") that clarify the employment tax treatment of partners in a partnership that owns a...more

Partners Are Not Employees, Yet

Recently the IRS issued guidance in the form of temporary and proposed regulations clarifying that individuals who are partners in a partnership that itself owns a disregarded entity are not to be treated as employees of the...more

Partnerships: IRS Extends Prohibition on Treating Partners as Employees

by Latham & Watkins LLP on

Employees of partnerships, LLCs or their disregarded entity subsidiaries who receive equity in such entities may be treated as “self-employed” for tax purposes. On May 3, 2016, the US Treasury Department (Treasury)...more

IRS Regulations Provide That Certain Employees of Partnerships Now Have Self-Employment Status for Employee Benefit and Tax...

by McDermott Will & Emery on

In Depth - The IRS and US Department of Treasury have issued final and temporary regulations which address benefit and self-employment tax issues regarding partners in a partnership which is the sole owner of a second,...more

Neither a Partner nor Employee Be: Treasury and the IRS Issue Regulations Clarifying the Employment Tax Treatment of Partners in...

The Treasury Department (Treasury) and the Internal Revenue Service (Service) have issued temporary regulations (Regulations) clarifying the federal employment tax treatment of the owners of partnerships and other entities...more

New Regulations Squash Planning Tool for Avoiding Self-Employment Tax and Related Employee Benefit Issues

by Williams Mullen on

Tax practitioners often face this issue: client is a limited liability company taxed as a partnership for federal income tax purposes (“LLC”), and it wants to issue equity to a current employee (“Individual”) without...more

DOL Fires Across the Bow of Businesses Underway With Independent Contractor Manpower

by Foley & Lardner LLP on

Employee classification issues have been a recurrent topic of ours, and with all the class action litigation arising from independent contractor and other classifications, we have had no shortage of opportunities to remind...more

IRS: Investment Fund Managers are Subject to Self-Employment Tax

by Jackson Walker on

The Office of Chief Counsel of the Internal Revenue Service (the "IRS") recently issued internal guidance in the form of a Chief Counsel Advice (the "CCA") indicating that the IRS has taken the position that the "limited...more

IRS Considers Whether Management Fees of an LLC Are Subject to Self-Employment Tax

A recent response by the Internal Revenue Service Chief Counsel (CCA) to an inquiry from one of its field office agents addressed the question of whether management fees earned by an investment manager organized as a limited...more

IRS Internal Memorandum Advises That Self-Employment Tax Applies to Profits From an Investment Manager

On September 5, 2014, the Office of Chief Counsel, Internal Revenue Service (IRS) released an internal generic legal advice memorandum advising an IRS field agent that the statutorily provided “limited partner” exception to...more

Members of Fund Management LLC Denied Self-Employment Tax Exception

by Goulston & Storrs PC on

In CCA 201436049 the IRS concluded that owners of an investment fund management company LLC were not eligible for the limited partner exception to Section 1402 self-employment taxes. Ultimately the IRS found that the income...more

New 3.8% Medicare Tax on Investment and Unearned Income Beginning in 2013

by Thompson Coburn LLP on

Starting January 1, 2013, a new 3.8% Medicare tax will apply to the investment and “unearned income” of individuals, trusts and estates. The tax is intended to apply to income exempt from the regular FICA or self-employment...more

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