IRS Temporary Regulations Clarify Self-Employment Tax Treatment Of Partners in Partnership That Owns Disregarded Entity

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Mark Bodron, James Chenoweth and Stephanie Jeane of Baker Botts look at the effect new final and temporary regulations (T.D. 9766) will have for partnerships that own a disregarded entity, as well as implications where partners have been treated as employees of the DRE for withholding and employee benefits purposes. The authors note “there is no de minimis ownership rule whereby an owner of a small percentage of the partnership could continue to be treated as an employee.”

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