Soroban Hedge Fund Blasts Self-Employment Tax Finding on Appeal

The IRS and US Tax Court lacked authority to determine the portion of a hedge fund’s income subject to self-employment taxes in special proceedings meant only for “partnership items,” the firm told the Second Circuit.

Soroban Capital Partners LP is seeking reversal of a Tax Court opinion that the company’s income distribution to its partners is subject to an additional $141 million in taxes under the Self-Employment Contributions Act because those partners were actively involved in the fund’s operations.

But Soroban’s brief, filed with the US Court of Appeals for the Second Circuit Dec. 8, also argued that determining which ...