Michigan Tax Law Articles, Blog & Documents | Foster Swift

Can Limited Partners Avoid Self-Employment Tax? What Fifth Circuit’s Decision Means for Business Owners

Michael C. Zahrt, Zachary W. Miller (Summer Associate) — Mon, 20 Jul 2026 09:00:01 -0400

Business owners who operate through partnerships or LLCs taxed as partnerships should take note: a recent Fifth Circuit Court of Appeals decision could significantly reduce the amount of self-employment tax certain partners owe.

Under long-standing tax law, partners generally pay self-employment (SECA) tax—currently 15.3%—on their share of business income. However, there is an important exception: the distributive share of income earned by a “limited partner” is typically not subject to SECA tax (although payments for services, called “guaranteed ...

Tax Folks Update: Golden Parachute Rules for Deferred Compensation Plans

Nicholas J. Stock II — Tue, 17 Mar 2026 09:00:02 -0400

This article discusses the application of Sections 280G and 4999 of the Internal Revenue Code and related treasury regulations (“IRC” or “Code”)[1], best practices, and alternative approaches to structuring and approving parachute payments in the context of a deferred compensation plan (“Plan”) for a privately held domestic company (“Company”)[2]. Assume a Plan such as a synthetic equity plan involving phantom stock to be paid in cash upon IRC 409A compliant payment events, substantially simplifying valuation issues noted below.

I. BACKGROUND

Section 280G ...