Developments In Carried Interest Taxation

Article by Stephen G. Mills , H. Neal Sandford , William J. Weiss and William H. Whitledge

As previously described in our March 3, 2009 Client Alert, President Obama's fiscal year 2010 budget proposal includes a provision regarding the taxation of "carried interests" as ordinary income. The Treasury Department's General Explanation of the Administration's Fiscal Year 2010 Revenue Proposal (the "General Explanation"), released earlier this month, provides some additional detail regarding the President's proposal. In addition, Representative Sander Levin (D-MI) recently introduced carried interest legislation (the "Levin Bill") that generally tracks prior legislative proposals. Because of the potential broad scope of the President's proposal and the Levin Bill, this alert describes several of their significant features.