The Fifth Circuit Court of Appeals opinion in Sirius Solutions L.L.L.P. v. Commissioner may change our views of entity choice. If the decision holds up, partnerships will be able to effectively make the portion of limited partner income subject to self-employment tax whatever they want, including zero. This contrasts with the IRS position upheld by the Tax Court in Soroban Capital that treated all of the income of limited partners who were active in the business as self-employment income.
Small Mistakes With Huge Costs for Your Client’s Tax Returns
Joshua Youngblood, EA, CTRS, CRETS, NTPI Fellow
We’ve all been there. A client walks into your office and, somewhere in the conversation, you realize that a seemingly minor oversight, a missed deadline, a form nobody filed, an election nobody mentioned, has spiraled into a five- or six-figure tax problem. In my years of practice, some of the most expensive mistakes I’ve seen weren’t the result of aggressive planning gone wrong. They were small, quiet errors. The kind that happens when a deadline slips, an election isn’t made, or a form gets overlooked entirely. The tax code is unforgiving in these situations, and the IRS has little sympathy for “I didn’t know.” This article walks through some of the most common, and most costly, small mistakes that can devastate your client’s tax situation, along with practical guidance for avoiding them.
