Carried Interest Rules Won’t Be Retroactive, IRS Official Says

Rules tightening a tax benefit for hedge fund managers are slated for release days before an upcoming filing deadline—but they won’t apply retroactively, an IRS official said.

The guidance is expected to address a 2017 tax law loophole that exempted corporations from a longer holding period for the beneficial treatment. Some saw that as an opportunity to convert to an S corporation and avoid the new regime under tax code Section 1061.

• Partnerships can rely on the proposed rules if they want, but they’ll have to follow all of them. Taxpayers can’t pick and choose the parts ...