Attorneys providing tax advice struggle with whether distributive share income is subject to self-employment tax for LLCs and partnerships. As a result of this uncertainty, they often reflexively recommend electing S corporation status solely to mitigate self-employment tax. Before making such an election, attorneys and their clients need to carefully weigh the potential disadvantages of S corporation status against a realistic estimate of the potential self-employment tax savings and against alternative structures and reporting positions that would allow the LLC members or partners to avoid self-employment tax on their distributive share income.

Presenter James R. Browne, JD will explain, based on current law and recent cases, what income from flow-through entities can be reported as exempt from self-employment income and the implications for structuring and classifying business entities. He will also highlight recent legislative proposals affecting self-employment tax on pass-through entities and the prospects for future legislative action.