Partner Jennifer Breen was quoted in a Tax Notes article about the US Tax Court’s opinion in Soroban Capital Partners LP v. Commissioner. Jennifer, who recently discussed the case during a webinar on self-employment tax hosted by the DC Bar Taxation Community, said that while the opinion will require limited partnerships and their partners to consider how they would undertake a functional analysis of the partners’ roles and responsibilities, it did not specify what type of analysis to use or how to apply it.
The functional analysis used in Renkemeyer, a case involving a three-attorney law firm organized as a Kansas LLP, may not be the best approach for partnerships like Soroban or other fund managers, Jennifer noted.
“These are just very different from a business perspective,” Jennifer said. “If you’re doing a functional analysis and you are looking at the facts and circumstances of the business and the partners involved, it’s really hard to take a three-person law firm partnership and that approach and apply it to a large asset manager with hundreds of employees and a very sophisticated business structure and the type of work that they’re doing.”
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