Carried Interest Tax Rules Under White House Office Review

The White House is reviewing an IRS proposal that likely restricts fund managers’ ability to get a lower tax rate on carried interest income.

Before the 2017 law, the portion of investment fund profits known as carried interest that goes to managers in the form of compensation was taxed at the capital gains rate instead of higher ordinary income tax rates—a benefit that critics said was unfair. The investment had to be held for over a year.

• The 2017 law amended tax code Section 1061 to raise that requirement to three years—except for corporations. The language has been seen as ...