Kristen A. Parillo, in Tax Notes, provided an update on the oral argument in Soroban Capital Partners LP v. Commissioner, the Second Circuit case in which a taxpayer is challenging the government’s interpretation of the term “limited partner” in section 1402(a)(13):
A panel of Second Circuit judges seemed highly skeptical of a New York hedge fund’s jurisdictional and substantive arguments regarding the limited partner exception to self-employment tax.
During June 25 oral arguments in Soroban Capital Partners LP v. Commissioner, the three judges tasked with deciding the case — Guido Calabresi, Denny Chin, and Sarah A.L. Merriam — didn’t appear to be swayed by the fund’s argument that the limited partner exception is tied to state law limited liability and that limited partner status can’t be decided in a partnership proceeding.
In addition to the Second Circuit, taxpayers are challenging the provision in the Fifth Circuit in Sirius Solutions, LLLP v. Commissioner (in which the panel voted in favor of the taxpayer and in which the government has petitioned for a rehearing en banc) and in the First Circuit in Denham Capital Management LP v. Bessent (in which the court ordered supplemental briefing, which has now been completed).
For previous TaxProf Blog coverage:
- Updates on the Limited Partner Exception Litigation (Mar. 18, 2026)
- Reflections on the Fifth Circuit’s Ruling on Limited Partner Exception (Jan. 21, 2026)
