Ezel / IRS Rulings / 201040013

CCA 201040013: Trade or business income must be separated from investment income for self-employment tax

Number
201040013
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Partnership Item
Topics
Procedure, penalties, and administration
Code sections
§ 6231
Ruling dated
September 8, 2010
Publicly released
October 8, 2010
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 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 is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, 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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