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ARTICLE · 03 AUGUST 2022

Senate's Proposed Changes To Tax System Could Dramatically Impact Private Equity

Duane Morris LLP
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On July 27, 2022, West Virginia Senator Joe Manchin and Senate Majority Leader Chuck Schumer introduced the Inflation Reduction Act of 2022...

United StatesTax
David A. Sussman
David A. Sussman
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On July 27, 2022, West Virginia Senator Joe Manchin and Senate Majority Leader Chuck Schumer introduced the Inflation Reduction Act of 2022, a budget reconciliation bill related to energy spending and tax policy. If enacted, it would negatively impact "carried interest" and add a 15 percent corporate alternative minimum tax for certain corporations. Private equity funds and their sponsors should be familiar with the bill and follow it closely as it makes its way through the legislative process.

Carried Interest

Although investments made by private equity funds are typically longer in term, the proposed legislation would exacerbate the inherent misalignment of interests between fund sponsors and their investors and make long-term capital gain treatment unobtainable for many fund sponsors. Specifically:

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Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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