What is Financial CARRIED INTEREST?

A TAX LOOPHOLE?

BY DR. DAVID E. MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Carried interest, or carry, in finance, is a share of the profits of an investment paid to the investment manager in excess of the amount that the manager contributes to the partnership, specifically in alternative investments (private equity and hedge funds).

CITE: https://www.r2library.com/Resource/Title/0826102549

In small businesses that are not blind pools, such as single property real estate, the investment manager often funds the business prior to the formation of the partnership. It is a performance fee, rewarding the manager for enhancing performance. The structure also takes advantage of favorable tax treatment in the United States.

However, critics of carried interest want it to be reclassified as ordinary income – not capital gains – to be taxed at the ordinary income tax rate. Private equity advocates argue that the increased tax will subdue the incentive to take the kind of risk that is necessary to invest in and manage companies to profitability.

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What is the carried interest tax loophole?

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TAXATION: https://www.taxpolicycenter.org/briefing-book/what-carried-interest-and-how-it-taxed

YOUR COMMENTS ARE APPRECIATED.

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Thank You

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One Response

  1. CARRIED INTEREST

    Lobbyists shielded carried interest from Biden’s tax hikes, top White House economist says:
    https://www.msn.com/en-us/money/markets/lobbyists-shielded-carried-interest-from-bidens-tax-hikes-top-white-house-economist-says/ar-AAP0qnY?li=BBnb7Kz

    Jake

    Like

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