U.S. Tax Court: Limited Partner SECA Exception Requires Functional Analysis

Highlights

• The U.S. Tax Court recently issued a precedential opinion in Soroban Capital v. Commissioner, holding that the limited partner exception to the Self-Employed Contributions Act (SECA) in Section 1402(a)(13) of the Internal Revenue Code requires an analysis into the functions and roles of the limited partner, so a state-law limited partner does not automatically qualify for the exception to SECA.
• This is a significant departure from how many taxpayers and tax advisors previously have interpreted and applied the SECA limited partner exception.

The U.S. Tax Court recently issued a precedential opinion in Soroban Capital v. Commissioner, holding that the limited partner exception to the Self-Employed Contributions Act (SECA) in Section 1402(a)(13) of the Internal Revenue Code requires an analysis into the functions and roles of the limited partner, so a state-law limited partner does not automatically qualify for the exception to SECA. This is a