Bloomberg Tax
Aug. 4, 2020, 6:00 PM

Carried Interest Tax Rules Could Bring Legal Fights for Treasury

Aysha Bagchi
Aysha Bagchi

There’s a looming possibility of legal challenges to Treasury’s position on a tax break for hedge fund and private equity managers, now that the government has issued proposed rules.

The proposed rules would prevent S corporations from taking advantage of a 2017 tax law provision that lets corporations get the favorable carried interest tax treatment faster—by holding assets for one year rather than three. The rules reignite a question about Treasury’s legal authority to exclude S corporations from the meaning of “corporations” in the provision, a question that has already been raised in at least one court case and ...

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