DEFINITION
By Staff Reporters
SPONSORS: http://www.MarcinkoAssociates.com
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Carried interest accounts for the bulk of private equity fund managers’ compensation. It is calculated as a share of fund profits, historically 20% above a threshold rate of return for limited partners.
In contrast with most other forms of employment compensation and business income, carried interest earned from fund investments held for at least three years is taxed as a long-term capital gain at a rate below the top marginal income tax rate.
Critics of the provision contend it taxes highly compensated private equity managers at a lower rate than comparably paid providers of labor or business services.
Defenders of carried interest argue taxing it as income would be unfair because it represents capital gains even if they’re not derived from recipients’ capital.
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Filed under: "Ask-an-Advisor", Accounting, Investing, Marcinko Associates, Taxation, Touring with Marcinko | Tagged: Accounting, capital, capital gains, carried interest, compensation, Income, Marcinko, Private Equity, private equity compensation, tax, Taxation |















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