Can Limited Partners be Subject to Self-Employment Tax?

Investment funds are often structured as limited partnerships. These partnerships allow professional managers to pool investor funds while maintaining operational flexibility. These structures typically have a general partner (“GP”) who manages day-to-day operations. Limited partners (“LP”) provide the capital and earn passive returns. The active manager and passive investor roles have different tax implications. Self-employment……

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Substantial Variance Doctrine for Informal Tax Refund Claims

Taxpayers often submit refund claims when they discover that they overpaid their taxes. Taxpayers usually do this by submitting a formal refund claim using the IRS’s prescribed forms. But this is not always required. In many cases, taxpayers will submit so-called “informal refund claims” to the IRS during the course of an IRS audit. The……

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From Commingled to Contested: The IRS’s Audit of Tax Deductions

The common idea that business expenses are deductible while personal expenses are not is an oversimplification. In reality, the tax rules are more nuanced. Some personal expenses are deductible, and the line between personal and business expenses is often blurry. This complexity is further compounded by the fact that many businesses, particularly small ones, fail……

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The Rules of the Game: Burden of Proof in Tax Disputes

Every relationship has rules, whether informal or formal. Every human interaction has them too. One can easily see this in forced relationships. Take organized sports, for example. Organized sports are essentially pre-planned interactions governed by specific rules that all parties agree to follow. The effectiveness of the rules hinges on proper enforcement, which often requires……

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