IRS Guidance On Treating Partners As Employees
The IRS has released temporary and proposed regulations clarifying that partners in a partnership that owns a disregarded entity (DRE) may not be treated as “employees” of the DRE (T.D. 9766; REG-114307-15). As a result, such partners are subject to self-employment tax on amounts received from the DRE and are not permitted to participate in certain tax-favored employee benefit plans.
Overview of the Regulations
The following example illustrates of the type of situation addressed by the […]