Insights & News

Senate Democrats Introduce Bill Targeting Carried Interest, Again

November 21, 2023

Senate Democrats Reintroduce Bill Targeting Carried Interest
A group of Democratic U.S. senators again introduced legislation to end the carried interest tax break that benefits fund managers. The bill would remove the carried interest tax break to prevent private equity managers and venture capitalists from paying the lower capital gains rate on certain compensation. The initial version of the Inflation Reduction Act included a provision on carried interest, but it was removed in the final version.


Tax Court: Foreign Partnership Owes Taxes in U.S. Over Asset Manager Earnings
The U.S. Tax Court held on Nov. 15 that a Cayman Islands partnership that used a U.S. financial adviser to manage its deals owes U.S. tax on its earnings. In YA Global Investments v. Commissioner of Internal Revenue, the partnership, which funded portfolio companies in exchange for stock, instructed a financial adviser based in New Jersey to manage its assets from 2006 to 2008. This relationship made the financial adviser’s activities attributable to the Cayman Islands partnership for U.S. tax purposes, the Tax Court said. The court found that the foreign partnership retained a degree of control over the U.S. financial adviser by managing its investment account and imposing restrictions on the financial adviser at any time.


IRS Releases Guidance on Charitable Giving Tool
The IRS released proposed rules on Nov. 14 to provide more direction for individuals who put money into donor-advised funds. The proposed rules relate to excise taxes on taxable distributions made by a sponsoring organization from a donor-advised fund. The IRS also clarifies additional definitions of terms, how to determine if a fund can be identified as a separate entity, and how to establish if a donor has advisory privileges, among other issues.


Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

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