Flashcards in Miscellaneous Deck (6)
What partnership income is subject to self-employment tax?
In the case of a partner other than a limited partner, the partner's share of ordinary business income, and even in the case of a limited partner, a guaranteed payment for services
Is income from an S corporation subject to self-employment tax?
No. But it has to be reasonable compensation.
What is a "limited partner" for purposes of the self-employment tax?
A partner that is not actively participating (Renkemeyer).
What is a "limited partner" for purposes of the self-employment tax, according to the 1997 regulations?
A partner who does not (i) have personal liability for partnership debts or claims, (ii) have authority to contract on behalf of the partnership, and (iii) participate for more than 500 hours in the partnership's trade or business in the year. However, if substantially all of the partnership's activities involve health, law, engineering, architecture, accounting, and certain other trades, anyone who provides those services is not a limited partner. Taxpayers can rely on these, but they cannot be enforced against taxpayers.
What partners are subject to the self-employment tax?
A partner that isn't a limited partner. A general partner is always subject to self-employment tax. A limited partner can be only with respect to guaranteed payments for services to the partnership.