The Tax Court, in a victory for the IRS, recently issued an opinion holding the limited partner exception to the Self-Employed Contributions Act Tax must be construed narrowly. The court held a limited partner under state law is not automatically a limited partner for purposes of the SECA exclusion.
SECA Background
SECA imposes a tax on the self-employment earnings of individuals, which mirrors the rates applicable to wages of employees under FICA—a 12.4% rate applicable to a capped portion of earnings, plus a 2.9% rate on all earnings (with an additional 0.9% charge above certain ...
Portfolio companies of venture capital and private equity funds usually motivate key executives through compensation tied to performance upon an exit. Such structures align the incentives of the fund with those of the executives but can lead to several tax issues that warrant thoughtful consideration.
280G Background Section 280G of the Internal Revenue Code seeks to curb excessive executive compensation triggered by a change in control. The rules apply when a C corporation experiences a change in control if certain “disqualified individuals” (including 1% shareholders ...
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