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Chief Counsel Advice 1040013 Released October 8, 2010 Advice

CCA 1040013: Trade or business income must be separated from investment income for self-employment tax

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This page covers one taxpayer's ruling from 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel Advice stated that self-employment income is trade or business income, not investment income. It advised separating the amount of trade or business income that would be subject to self-employment tax if any partner is an individual or pass-through partner. The advice identified Olsen-Smith v. Commissioner as discussing the issue in detail.

Ruling snapshot

  • Question: How should partnership income be separated when determining amounts potentially subject to self-employment tax?
  • Outcome: Advice given
  • Key authorities: IRC § 6231; Olsen-Smith v. Commissioner

Full text (IRS public release)

ID: CCA_2010090814240937 Number: 201040013
Release Date: 10/8/2010
Office: ----------
UILC: 6231.03-00

From: -------------------
Sent: Wednesday, September 08, 2010 2:24:12 PM
To: ---------------------
Cc: -----------
Subject: RE: TEFRA & SE Tax

Self employment income is trade or business income, not investment income. So you will need to clearly
separate the amount of trade or business income that would be subject to self employment tax if any
partner is an individual or pass-thru partner. This issue is discussed in detail on Olsen-Smith v.
Commissioner.

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