E-Alert

February 23 , 2010

Partnership Issues Clarified

 

When can a member of an LLC be considered a limited partner for self-employment tax purposes?  Can a partner receive wages from a partnership?  While there is no definitive answer, the IRS provides some limited guidance.

Speaking at a recent industry meeting, Dianna Miosi, Special Counsel in the IRS Office of Associate Chief Counsel, addressed whether a member of an LLC qualifies as a limited partner, and is, thus, exempt from self-employment tax.  She indicated that if a taxpayer structures a transaction regarding self-employment tax under the 1997 proposed regulations, the IRS would not challenge that position.

Ms. Miosi further indicated that she does not anticipate any regulation that would allow a partner to receive wages from the partnership.

If you have any questions regarding the information in this article, or have any other issues you would like to discuss, please feel free to contact the DZH Phillips tax department at 415.781.2500 or email cpas@dzhphillips.com.

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