Carried Interest Taxation

Senate Majority Leader Harry Reid (D-NV) declared today that the earliest that the full Senate would take up carried interest legislation would be 2008.  Senator Reid expressed hesitancy in singling out private equity partnerships for special tax treatment of carried interests.  However, he hinted at supporting expanding the proposal to include oil and gas, real estate and other similarly situated partnerships.

Senator Reid's statement contains good and bad news for both proponents and opponents of carried interest tax legislation.  While it does not appear that Congress will pass legislation this year, the issue is far from dead.  Moreover, while Senator Reid, like Senator Schumer, doesn't want extend the legislation merely to one type of financial partnership, they are actively considering sweeping other types of partnerships into the debate.