Carried Interest Taxation

The news is coming fast and furiously:

· Congressional staffers are hinting that a more significant legislative proposal dealing with carried interests is in the works. This proposal would apparently be broader than the Blackstone Bill.

· Treasury Secretary Pauling discloses that Treasury is undertaking its own study regarding the appropriate tax treatment of carried interests. He would not say whether or not Treasury would support the Blackstone Bill.

· Senator Baucus now says that he would consider shortening the 5-year grace period for Blackstone and Fortress to be taxable as corporations under his proposed legislation.