Jeremy digs into what actually makes someone a partner for federal tax purposes, tracing the definition back to the Supreme Court's Tower and Culbertson decisions and the "hypothetical liquidation" test for capital interests. From there, he unpacks the messier question of self-employment tax on partnership income: the undefined "limited partner as such" exception under IRC Section 1402(a)(13), and the current circuit split between the Tax Court's functional analysis (Renkemeyer, Soroban) and the Fifth Circuit's state-law approach in Sirius Solutions, with Denham Capital Management still pending at the First Circuit.
Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com
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https://www.youtube.com/@TaxinAction
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This podcast is a production of Earmark Media
- (00:00) - Partnerships Recap Goals
- (01:27) - LLC Members Case Study
- (03:17) - Are Partners Equal
- (05:11) - Who Counts As Partner
- (10:14) - Tower Case Principles
- (14:48) - Culbertson Intent Test
- (17:30) - Congress Defines Capital Interest
- (26:26) - Capital Interest Explained
- (28:47) - General Versus Limited Partners
- (30:18) - Self Employment Tax Basics
- (33:19) - Limited Partner Definition Fight
- (36:06) - Key Court Cases Split
- (48:47) - New Cases Jurisdiction Issues
- (52:12) - Back To LLC Example
- (55:02) - Takeaways Next Episode
Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com
Subscribe on YouTube
https://www.youtube.com/@TaxinAction
Earn CPE for Listening to This Podcast
https://www.earmark.app/
This podcast is a production of Earmark Media