IRS Urges 2nd Circuit to Uphold Soroban Tax Ruling Using Revised 5th Circuit Opinion
Updated
Updated · Bloomberg Law · Aug 19
IRS Urges 2nd Circuit to Uphold Soroban Tax Ruling Using Revised 5th Circuit Opinion
3 articles · Updated · Bloomberg Law · Aug 19
Summary
An Aug. 18 IRS letter told the Second Circuit that a revised Fifth Circuit opinion supports taxing Soroban Capital Partners LP principals’ earnings as self-employment income.
The revised ruling in K. Alain LLLP v. Commissioner defines a tax-exempt “limited partner” as one who plays no significant role in managing or running a business.
That definition bolsters the government’s position that Soroban’s principals do not qualify for the limited-partner exemption and that the US Tax Court’s decision should stand.
The filing adds fresh appellate support from another circuit as the Second Circuit weighs a closely watched dispute over how partnership roles affect self-employment tax liability.