Carried Interest Tax Break Restricted in New IRS Regulations

Jan. 7, 2021, 8:29 PM

The Internal Revenue Service released regulations restricting a valuable tax break that hedge fund managers were able to claim after an error in the 2017 Republicans tax law.

The regulations, published Thursday, bar money managers from using business entities, known as S corporations, to take advantage of an exemption to the law’s rules for taxing carried interest.

The regulations address what some tax policy experts see as a mistake in the 2017 tax overhaul that allows hedge fund managers to exploit a loophole to avoid paying higher taxes on their investments. The Treasury Department first issued a statement in ...

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