New Version of Tax Extenders Bill and Summary Now Available (and attached)

The Senate has released its version of the tax extenders bill, and a summary. It has changed the taxation of the carried interest as approved by the House. The change is summarized below. Links to the summary of the bill and bill are also below. There appears to have been no change made to the onerous S corporation tax provisions.

Summary of the bill.

Full text of bill.

You can also find links to both at this site.

From the summary regarding the taxation of carried interest:

Taxation of Carried Interest. This modification decreases the amount of carried interest that is recharacterized as ordinary income from 75 percent to 65 percent and increases the amount treated as capital gains from 25 percent to 35 percent in taxable years beginning after December 12, 2012. The change further decreases the amount of carried interest that is recharacterized as ordinary income to 55 percent and increases the amount treated as capital gains to 45 percent for gain or loss attributable to the sale of an asset which is held for 7 or more years. Another modification provides that a non-service individual or widely held regulated investment company who sells an interest (held directly or indirectly through a partnership, S corporation, estate, trust) in an energy-related publicly traded partnership is exempt from recharacterization as ordinary income under Internal Revenue Code section 751(a) that portion of the gain or loss attributable to investment services partnership interests held by the publicly traded partnership. With these modifications, this provision is estimated to raise $14.453 billion over 10 years.

Update:
 
Some additional coverage of the latest version of the bill:
 
– An overview of the legislation from the NY Times blog The Caucus
 
– From the Senate Finance Committee’s website, a press release on the bill, and the text of Baucus’ floor statement from earlier today
 
– The NT Times Dealbook Blog discusses a new study indicating that the carried interest tax change would significantly reduce private equity investment 
 
– On a separate topic, here’s a brief update on the status of the Dodd financial reform bill (also from the On the Money blog)

 

 

About Joe Wallin

Joe Wallin focuses on emerging, high growth, and startup companies. Joe frequently represents companies in angel and venture financings, mergers and acquisitions, and other significant business transactions. Joe also represents investors in U.S. businesses, and provides general counsel services for companies from startup to post-public.
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