Limited Partners Self-Employment Tax Case Heads to Fifth Circuit

The US Tax Court’s test for deciding when limited partners are exempt from self-employment taxes on their partnership-allocated earnings is on its way to the Fifth Circuit.

Sirius Solutions, a Houston-based professional services firm represented by Holland & Knight LLP, appealed the Tax Court’s decision to sustain a $7.37 million increase to its 2015 net earnings from self-employment. The appeal, docketed Monday, puts in its crosshairs a major test for limited partners seeking an exception from the Self-Employed Contributions Act.

The Tax Court ruled in Soroban Capital Partners LP v. Commissioner that state-law limited partners don’t automatically qualify for a ...