Archive for the ‘Carried Interest’ Category

Camp Defines Private Equity as a Business, Would Boost Taxes on Carried Interest

In the tax reform roadmap he released yesterday, House Ways & Means Committee Chair Dave Camp (R-MI) targeted the trillion dollar private equity industry.  Not only did he propose to tax the compensation of private equity managers at ordinary rates rather than lower capital gains rates, he also called the industry out. The official description […]

An Upcoming Debate on Whether Private Equity Should Pay Higher Taxes

If you are looking for a break from the dreary debate over the budget, our friends at Tax Analysts will be holding a roundtable discussion on Friday afternoon on the tax treatment of private equity firms. The issue has generated lots of interest since the First Circuit Court of Appeals ruled that a private equity […]

Do Private Equity Firms and their Partners Owe Ordinary Income Tax Under Today’s Law?

For a decade, Congress has been debating how to tax managers of private equity firms. The argument is pretty familiar to tax wonks: Should these partners treat this compensation (commonly called carried interest) as capital gains, as they do today? Or should they be taxed at the higher ordinary income rate as President Obama and […]

Why the IRS Should be Taxing the Profits of Private Equity Funds as Ordinary Income

For years, the battle over carried interest has focused on how to tax the compensation of private equity managers. But a careful reading of  the law suggests that all the business profits of these investment firms, not just the pay of their managers, are ordinary income, and should be taxed that way. Until now, the […]

Why Do U.S. Investment Funds Operate in Tax Havens?

Mitt Romney’s holdings in the Cayman Islands have generated lots of interest in investment funds that are managed from the U.S. but incorporated in foreign jurisdictions.   But taxable U.S. investors like Romney don’t get much benefit from such funds.  The real winners are U.S. tax-exempt entities, such as charities, pension funds, university endowments, and IRAs, […]

Carlyle, Bain Capital, and the Tax Treatment of “The Carry”

The on-again, off-again battle over how to tax the compensation of private equity managers may be on again, thanks to the confluence of two seemingly unrelated events. The first is the controversy over the role of Bain Capital, the investment partnership whose founders included Republican presidential hopeful Mitt Romney. The second is the disclosure by […]

Taxing Carried Interest and the Sale of Private Equity Firms

Critics of the ongoing congressional effort to tax compensation of private equity managers as high-rate ordinary income rather than low-rate capital gains are focusing on a new objection: Whatever the tax treatment of this so-called “carried interest,” Congress would unfairly raise taxes on the sale of these partnerships by also treating a share of the returns as ordinary income rather than capital gains.

Another Run at Taxing Carried Interest

TaxVox’s very first article—in October, 2007—was about congressional efforts to tax the compensation of hedge fund and private equity managers as ordinary income rather than capital gains. For three years now, the House has passed such a tax on this income, known as carried interest. And for three years the levy has died in the Senate.

Pay Go, Pay Gone: AMT Drives Senate Dems to Blink

To the surprise of no-one, the Senate has blinked in the stand-off over whether Congress will pay for the cost of patching the Alternative Minimum Tax for another year. The question now: Will House Democrats stand firm, or will they too cave in to the big-bucks lobbying campaign of the hedge fund and private equity industry?

Carry Me Back to Old Greenwich

There has been talk in recent days that the congressional effort to raise taxes on the earnings of private equity managers has been killed. Don’t believe it.