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  • videocam On-Demand Webinar
  • signal_cellular_alt Intermediate
  • card_travel Tax Preparer
  • schedule 110 minutes

LLCs and S Corporations: Mitigating Self-Employment Tax for Flow-Through Entities

$197.00

This course is $0 with these passes:

CPE
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About the Course

Introduction

This course will assist tax professionals in determining whether flow-through income should be subject to self-employment tax. Our veteran pass-through entity panelist will explain how reasonable compensation, payments to partners, and management authority status affect whether an owner's distributive share of income from a pass-through entity is subject to self-employment tax. He will also examine how the recent ruling regarding Sirius Solutions, LLLP affects limited partners operating within and outside the Fifth Circuit. 

Description

Tax advisers struggle with whether a partner's or member's distributive share of income is subject to self-employment tax. On January 16, 2026, the Fifth Circuit Court of Appeals rejected the IRS and Tax Court’s definition of limited partner, including its reliance on functional analysis tests. In Sirius Solutions, LLLP. v. Commissioner, No. 24-60240 (5th Cir. 2026), the Court states, “This case turns on the meaning of ‘limited partner’ in 26 U.S.C. § 1402(a)(13).” To define “limited partner”, the Court referenced the dictionary, the Social Security Administration, and the IRS’s definitions of the term. This stark reversal creates new questions for partnerships and their advisers. Understanding how this ruling impacts LLCs is key.

Listen as our self-employment tax expert explains, based on current law and recent cases, including Sirius Solutions LLLP v. Commissioner, what income from flow-through entities can be reported as exempt from self-employment income, and the implications for structuring and classifying business entities. 

Presented By

Larry Pon
CPA/PFS, CFP, EA, USTCP, AEP
Pon & Associates, CPA

Mr. Pon has been in practice since 1986 providing comprehensive accounting, tax, payroll, and business advisory services. He specializes in tax preparation, tax representation, tax planning, business planning, financial planning, and estate planning. Services include IRS and state audit representation, business startup services, and charitable planning. Mr. Pon is a frequent author and lecturer to financial and legal professionals and the public on tax and financial planning topics.

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Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Date + Time

  • event

    Friday, February 6, 2026

  • schedule

    1:00 p.m. ET./10:00 a.m. PT

I. Overview of self-employment tax on pass-through income

II. S corporations

A. Self-employment tax considerations

B. Reasonable compensation

C. Weighing S corporation status

III. LLCs and partnerships

A. The limited partner exception: law and recent cases

B. Planning implications

IV. Recent cases

A. Sirius Solutions LLLP

B. Soroban Capital Partners LP

C. Denham Capital Management LP

D. Other relevant cases

V. OBBBA considerations and proposed legislative changes

The panelist will cover these and other critical issues:

  • When should an LLC member's flow-through income be reported as self-employment income?
  • The impact of Sirius v. Commissioner on self-employment tax and limited partners
  • How can payments to partners be structured to mitigate self-employment tax?
  • When do the disadvantages of S corporation status outweigh the potential self-employment tax savings?
  • New considerations after the OBBBA
  • Although the 5th Circuit vacated the Tax Court case for Sirius, what does that mean for you and your clients?

Learning Objectives

After completing this course, you will be able to:

  • Recognize when a taxpayer is subject to self-employment tax
  • Determine when an LLC member or S corporation shareholder's flow-through income should be reported as self-employment income
  • Identify the advantages and disadvantages of S corporation status
  • Verify that reasonable compensation is "reasonable" and not subject to be treated as disguised dividends
  • Ascertain the various tests related to limited partners and the treatment of an LLC member as a limited partner
  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite:

    Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.


BARBRI, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

BARBRI CE webinars-powered by Barbri-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .