Sonita M. Bennitt

In the latest self-employment tax ruling, the Fifth Circuit Court of Appeals issued a ruling in Sirius Solutions, L.L.L.P. v. Commissioner (the “Ruling”) that will ultimately permit state-law limited partners to exclude their distributive shares of partnership income from income for self-employment tax purposes.

On December 12, the Treasury Department issued Proposed Treasury Regulations which, for the first time, appear to provide a potential window into the Internal Revenue Service’s view as to when an investment in debt potentially constitutes a trade or business for U.S. federal income tax purposes (the “Proposed Regulations”), notwithstanding that no inference is intended.

On December 12, the Treasury Department issued final Treasury Regulations (the “Final Regulations”) and proposed Treasury Regulations (the “Proposed Regulations”) that address various issues under Section 892 of the Internal Revenue Code (“Section 892”). In particular, the Final Regulations finalized a proposal from 2011 that permits foreign governmental investors to make certain passive investments in private funds without losing their exemption under Section 892. A.