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Wednesday, December 9, 2009

House Passes Tax Extenders Bill, With Tax Increase on Carried Interests

The House today, in a most party-line vote of 241-181, approved H.R. 4213, The Tax Extenders Act of 2009, which extends 45 tax provisions scheduled to expire at the end of 2009, paid for by taxing carried interests at ordinary income rates (rather than at capital gains rates) and by imposing more stringent reporting rules on offshore accounts.  The bill also would require the Joint Committee on Taxation to do a detailed study of tax expenditures by November 30, 2010.

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Tracked on Dec 10, 2009 10:40:36 AM

Comments

Carried Interests -

It appears the ordinary income recharacterization is effective for income from an “investment services partnership” for years after 12/31/2009 - regardless of the date of formation of the partnership or acquisition of the partnership interest.

See p 188 of the Joint Committee’s Technical Explanation (http://www.jct.gov/publications.html?func=startdown&id=3640) for effective date.

Ouch!

Posted by: E. Wayne Williams | Dec 11, 2009 12:46:13 PM