IRS Plans to Issue Regulations Clarifying Limitations on Carried Interest

WASHINGTON — The Internal Revenue Service announced today that S corporations are subject to the extended three year holding period for applicable partnership interests and that regulations will be issued soon.

Carried interests are ownership interests in a partnership that share in the partnership’s net profits.  Carried interests often are issued to investment managers in connection with the investment manager’s services.  These interests often result in the holder receiving capital gains which are taxed at a lower rate, rather than ordinary income.  

Source: IRS

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