A recent Fifth Circuit decision, Sirius Solutions LLLP v. Commissioner, brought welcome news for the investment funds industry. In Sirius, the Fifth Circuit held that the Self-Employment Contributions Act (“SECA”) “limited...more
Generally, the Internal Revenue Code imposes Social Security and Medicare taxes on earnings from self-employment. However, a limited partner’s share of partnership income is not subject to self-employment taxes, with a narrow...more
2025 was characterized by significant new legislation impacting private funds that in many respects preserved the status quo of many core features relevant to private equity, ongoing judicial activity shaping enforcement and...more
Welcome to this week’s edition of Tax Bytes. Our team of tax lawyers is actively monitoring for federal and international tax developments and issues of note. Each week we pull together the items we deem most important to...more
On January 16, 2026, the Fifth Circuit decided Sirius Solutions, L.L.L.P. v. Commissioner, which vacated a prior decision of the Tax Court that had denied limited partners in a state law limited partnership the benefit of the...more
A recent federal court decision furnishes limited partners with a significant tax victory. The Fifth Circuit Court of Appeals recently decided that limited partners are eligible for the self-employment tax exclusion under...more
The U.S. Court of Appeals for the Fifth Circuit ruled that the meaning of “limited partner” under Section 1402(a)(13) of the Internal Revenue Code of 1986, as amended (the “Code”), is determined under state law. ...more
In the latest self-employment tax ruling, the Fifth Circuit Court of Appeals issued a ruling in Sirius Solutions, L.L.L.P. v. Commissioner (the “Ruling”) that will ultimately permit state-law limited partners to exclude their...more
On January 16, 2026, in Sirius Solutions v. Commissioner, the U.S. Court of Appeals for the Fifth Circuit held that limited partners in a partnership may qualify for an exemption from self-employment tax on their distributive...more
On January 16, 2026, in Sirius Solutions, L.L.L.P. v. Commissioner, No. 24-60240 (5th Cir. Jan. 16, 2026), the U.S. Court of Appeals for the Fifth Circuit reversed the Tax Court and held that, for self-employment tax...more
In the summer of 2025, we issued an alert on this subject, U.S. Tax Court Issues Ruling on Self-Employment Tax Exception for Limited Partners (06.11.2025). The case discussed in that alert was the third of a series of...more
This January, the Fifth Circuit Court of Appeals in Sirius Solutions L.L.L.P. v. Commissioner reversed a pro-IRS decision by the United States Tax Court and eased the burden of self-employment tax for passive owners in...more
On January 16, 2026, the United States Court of Appeals for the Fifth Circuit issued a ruling defining the term “limited partner” as used in the Internal Revenue Code of 1986, as amended (the “Code”). The Court held that a...more
On January 16, 2026, the U.S. Court of Appeals for the Fifth Circuit decisively rejected the IRS’ attempt to narrow the definition of “limited partner” for purposes of the self-employment tax exclusion under section...more
In a significant decision for the investment funds industry, the U.S. Court of Appeals for the Fifth Circuit has officially rejected the Internal Revenue Service (IRS)’s “passive investor” test for the limited partner...more
Contractors often maintain both a stand‑alone office and a home office for scheduling, estimating, bookkeeping, and client meetings. The IRS allows a deduction for the business use of part of your home if strict requirements...more
On January 16, 2026, the U.S. Court of Appeals for the Fifth Circuit issued a closely watched decision in Sirius Solutions, L.L.L.P. v. Commissioner (“Sirius”), vacating and remanding the Tax Court’s holding that certain...more
The U.S. Court of Appeals for the Fifth Circuit issued a split (2-1) decision in favor of the taxpayer in Sirius Solutions, L.L.L.P. v. Commissioner on January 16, 2026, holding that the “limited partner exception” to...more
On January 16, 2026, the U.S. Court of Appeals for the Fifth Circuit rejected the “Passive Investor” test used by the Tax Court in Soroban Capital Partners LP v. Commissioner (“Soroban”) and determined that limited partners...more
On January 16, 2026, the US Court of Appeals for the Fifth Circuit became the first federal appellate court to interpret the “limited partner” exception from self-employment tax under Section 1402(a)(13) of the Internal...more
Last week, the federal Court of Appeals for the Fifth Circuit ruled that the U.S. Tax Court had misinterpreted the Code’s self-employment tax rules as they apply to individuals who hold limited partnership interests in a...more
We are often asked by owners of limited liability companies (LLCs) to help them issue “profits interests” to service providers of their LLCs. At first glance, profits interests seem perfect — after all, they offer a low-cost,...more
On January 16, 2026, the Fifth Circuit, in Sirius Solutions L.L.L.P. v. Commissioner (“Sirius”), reversed the Tax Court and held (in a 2-1 decision) that partners with limited liability are not subject to self-employment tax...more
The below articles are part of Gorin’s Business Succession Solutions, a complimentary quarterly resource by Thompson Coburn partner Steve Gorin on tax planning for business owners, with an emphasis on income, estate, and...more
The U.S. Court of Appeals for the Fifth Circuit issued a pivotal decision in Sirius Solutions, L.L.L.P. v. Commissioner on January 16, 2026, rejecting the government's "passive investor" test and instead finding that a...more