The Shifting Sands of Tax Law: Fifth Circuit's Reversal on Limited Partner Self Employment Tax Exception The recent reversal by the Fifth Circuit in K Alain L. L. P. v.
Commissioner has sent shockwaves through the tax community, leaving many unclear about its implications for partnerships and limited partners going forward.
The court initially held that a limited partner is someone with state law limited liability, regardless of their actual involvement in the business, but later deemed this opinion "inconsistent with congressional intent.