Ezel / IRS Rulings / 1326016
Chief Counsel Advice 1326016 Released June 28, 2013 Advice

CCA 1326016: Partner status and pass-through self-employment income questions belong in specified proceedings

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This page covers one taxpayer's ruling from 2013, 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 2013
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

The Chief Counsel's Office explained that whether a listed partner is a partner for federal tax purposes is generally determined under the Supreme Court's Culbertson and Tower tests. The status of a listed partner is a partnership item, so the determination would be subject to the recipient's final partnership administrative adjustment, or FPAA. The memorandum also addressed self-employment income for certain pass-through partners. It said the status of the pass-through partner for that purpose belonged to the identified jurisdiction, and noted that a disregarded entity's owner might be subject to self-employment tax.

Ruling snapshot

  • Question: How should partner status and pass-through self-employment income be handled in a partnership proceeding?
  • Outcome: Advice given
  • Key authorities: IRC § 6231; Culbertson and Tower cases; Blonien v. Commissioner, 118 T.C. 541 (2002); Olsen v. Commissioner, T.C. Memo 2005-174

Full text (IRS public release)

ID: CCA_2013032508574101 Third Party Communication: None

UILC: 6231.02-00 Date of Communication: Not Applicable

Number: 201326016
Release Date: 6/28/2013
From:
Sent: Monday, March 25, 2013 8:57:41 AM
To:
Cc:
Bcc:
Subject: RE: Issue whether a partner is really a partner

This is a substantive question under ----- jurisdiction. -------- or ----------- in that division
may be able to help you. Generally we look to the Supreme Court tests in the Culbertson
and Tower cases to determine whether a person is a partner for federal tax purposes; a
person is a partner if he joins together with others capital or services in a trade or
business for profit.

Jurisdictionally, the status of a listed partner as a partner is a partnership item under
Blonien v. Commissioner, 118 T.C. 541 (2002). Thus, this determination would be subject
to your FPAA.

We also determine self-employment income for certain pass-thru partners if the ultimate
tax paying indirect partner would be subject to self-employment tax from the
partnership. See Olsen v. Commissioner, T.C. Memo 2005-174. The status of your
pass-thru partner for this purpose is under --------- jurisdiction- but I suspect that if your
pass-thru partner is a disregarded entity, its owner would be subject to self-employment
tax and we would, consequently, have to determine the pass-thru partner’s share of self-
employment income in this proceeding.

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