TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, March 8, 2018

Treasury To Close Carried Interest Loophole

Wall Street Journal, Treasury Issues Tax Guidance Limiting Carried-Interest Provision:

The Treasury Department moved Thursday [Notice 2018-18] to limit a gap that could have let some investment-fund managers avoid higher taxes on their carried-interest income.

The formal move, previously announced by Treasury Secretary Steven Mnuchin, will be followed by regulations that will be retroactive to Jan. 1, the government said. ...

Treasury’s notice warns taxpayers that the government wants to act retroactively and they should disclose any positions on tax returns that are contrary to the government guidance, said Steve Rosenthal, a tax lawyer and senior fellow at the Tax Policy Center in Washington.

But, Mr. Rosenthal said, the notice is “skimpy,” lacks support in the law and stands in contrast with the plain words of the statute.

“Would I be given pause by this if I were advising clients?” he said. “No. I would tell clients, disclose and be ready for challenge. But in the end you’re likely to win.”

https://taxprof.typepad.com/taxprof_blog/2018/03/treasury-to-close-carried-interest-loophole-in-new-tax-law.html

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Comments

Likely to prevail??? Then let's get Congress to tighten up the verbiage, capital gain treatment for earnings from active management of a portfolio has been an embarrassment for years!

Posted by: Jim Osburn CPA | Mar 8, 2018 1:13:53 PM