A K-1 Title Is Not Enough Anymore

The 5th Circuit changed the limited-partner self-employment tax test. Now tax teams need facts, not labels.

Author

Emily Asher
August 26, 2026

Limited partners just got pulled back into one of the more expensive gray areas in partnership tax: when their share of business income can avoid self-employment tax.

That sounds narrow until you remember the rate. Self-employment tax can run 15.3%. For active partners with passthrough income, the answer can move real money.

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