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What it is – How it works?
[By staff reporters]
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Carried interest or carry, in finance, specifically in alternative investments (i.e., private equity and hedge funds), is a share of the profits of an investment or investment fund that is paid to the investment manager in excess of the amount that the manager contributes to the partnership.
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As a practical matter, it is a form of performance fee that rewards the manager for enhancing performance.
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Tax Status
Carried interest, income flowing to the general partner of a private investment fund, often is treated as capital gains for the purposes of taxation.
Some view this tax preference as an unfair, market-distorting loophole.
Others argue that it is consistent with the tax treatment of other entrepreneurial income.
MORE: News about Carried Interest Tax Break
Assessment
Your thoughts are appreciated.
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Invite Dr. Marcinko
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Filed under: Investing | Tagged: carried interest, carry, hedge funds, Private Equity, what is carried interest? |
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