US Carried Interest Proposed Regulations Offer Long-Term Capital Gain Planning Opportunities for Private Equity and Real Estate Fund Sponsors and Managers (September 2020)
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Introduction
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Recently enacted Section 1061 of the U.S. Internal Revenue Code generally requires that capital assets be held for more than three years (rather than the normal one-year holding period requirement) in order for individuals, trusts or estates who are associated with sponsors and managers of investment partnerships, and are entitled to receive allocations of gain from those partnerships, to benefit from the reduced rate of U.S. federal income tax that is imposed on long-term capital gains. The Department of Treasury recently released proposed regulations that modify and clarify the scope and operation of Section 1061 in many important respects.
