On May 28, 2025, in Soroban Capital Partners LP v. Commissioner (T.C. Memo 2025-52) (“Soroban II”), the Tax Court held the active role of limited partners in a fund manager caused them to fail to qualify as “limited partners” for purposes of section 1402(a)(13) and, therefore, the limited

Rita N. Halabi
Rita Halabi is an associate in the Tax Department. She advises public, private and governmental entities on a variety of U.S. federal corporate, international and partnership tax matters, including mergers and acquisitions, cross-border private equity and investment fund transactions, preferred equity investments, structured finance and fund finance transactions, restructurings and bankruptcy-related transactions, capital markets transactions and tax controversy.
Rita is devoted to thought leadership on tax-related topics. She is a contributing author to “International Tax Disputes: Arbitration, Mediation, and Dispute Management”, an international tax treatise published by Edward Elgar Publishing. Rita was recently the keynote speaker at a New York State Bar Association Tax Section event and participated in a private funds panel at an American Bar Association Tax Section conference. She serves on the leadership team of the American Bar Association Tax Section’s Investment Management Committee. In addition, Rita regularly blogs about developments in U.S. federal tax law on the Proskauer Tax Talks blog.
IRS and Treasury Announce Withdrawal of Related Party Basis Shifting Regulations
On April 17, 2025, the U.S. Internal Revenue Service (the “IRS”) issued Notice 2025-23 (the “Notice”), announcing its intention to withdraw the recently released final regulations final regulationsthat classify certain partnership related party basis shifting transactions and substantially similar transactions as “transactions of interest”. The Notice provides taxpayers and their…
Final Regulations Issued for Certain Partnership Related Party Basis Adjustment Transactions
Introduction
On January 10, 2025, the Treasury Department and the U.S. Internal Revenue Service (the “IRS”) released final regulations (the “regulations”) classifying certain partnership related party basis adjustment transactions and substantially similar transactions as transactions of interest, a type of reportable transaction, which requires disclosure for the taxpayer and its…
Senators Crapo and Wyden Release Draft Bipartisan Taxpayer Rights Legislation
I. Introduction
On January 30, 2025, Mike Crapo (R-ID), the Chairman of the Senate Finance Committee, and Senator Ron Wyden (D-OR), the Ranking Member of the Senate Finance Committee released a discussion draft of the “Taxpayer Assistance and Service Act” (the “bill”), a bipartisan taxpayer rights bill intended…
Final Regulations Issued on Allocation of Partnership Liabilities Under Section 752
Introduction
On December 2, 2024, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) published final regulations (the “Final Regulations”) on section 752[1] regarding the allocation of partnership recourse liabilities in situations in which multiple partners and related parties bear part or all of…
Summary of Tax Proposals in Leaked Document Detailing Policy Proposals
I. Introduction
On January 17, 2025, news sources reported that Republican members of Congress circulated a detailed list of legislative policy options, including tax proposals. This blog post summarizes some of the tax proposals and corresponding revenue estimates mentioned in the list.
II. Individuals
(a) SALT Reform Options
The…
Tax Court Reaffirmed Soroban’s Holding that Active Limited Partners of State Law Limited Partnerships May Be Subject to Self-Employment Tax
On December 23, 2024, in Denham Capital Management LP v. Commissioner (T.C. Memo. 2024-114), the Tax Court reaffirmed its earlier ruling in Soroban Capital Partners LP v. Commissioner (161 T.C. No. 12.) that active limited partners of a state law limited partnership are not entitled to the “limited partner exception”…
The IRS and Senator Warren Raise Concerns about Lodging and Health Care REITs
The IRS and Senator Warren Raise Concerns about Lodging and Health Care REITs
I. Introduction
On September 3, 2024, Senator Elizabeth Warren (D-MA) sent a letter to the Internal Revenue Service (the “IRS”) urging it to “increase enforcement scrutiny of REITs, especially large health and hospitality REITs that may be…

Proposed Regulations Issued on the Excise Tax on Repurchases of Corporate Stock
Introduction
On April 9, 2024, the Department of the Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) issued two sets of proposed Treasury Regulations related to section 4501, REG-115710-22, which provides guidance on the application of section 4501, and REG-118499-23 (together with REG-115710-22, the…
Final Regulations on Domestically Controlled REITs
- Introduction
On April 24, 2024, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) issued final regulations[1] on the definition of “domestically controlled” real estate investment trusts (“REITs”) (the “Final Regulations”). The Final Regulations retain…