Carried Interest Taxation

Senate Finance Committee Chairman Baucus (D-MT) said yesterday that he expected to introduce a more comprehensive carried interest bill later this year.  In general terms, Senator Baucus indicated that he expected the legislation to take a similar approach to the House Bill introduced last month to tax gains allocable to a carried interest as compensation for services regardless of the character of the gain to the partnership.

In the next few days, we're also going to look at two other approaches that have been suggested to address the carried interest issue, (1) taxing profits allocable to carried interest at a rate between capital gain and ordinary income and (2) abolition of the preferential rates for capital gains.