The carried interest tax issue, however, is a red herring and a topic for another time.
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They have focused like a laser beam on the holy grail of compensation carried interest.
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The unlimited Medicare portion is a great concern of managers with large carried interest income.
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And I mentioned -- did I mention carried interest -- and how carried interest is taxed.
Carried interest is not the only concern weighing on the minds of private-equity bigwigs.
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Repealing carried interest is losing appeal as more and more leaders oppose its consequences, unintended or otherwise.
Dividends and carried interest taxed would be taxed at ordinary income tax rates for high income taxpayers.
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Venture capitalists have been using the carried interest concept since the modern VC industry arose in the 1960s.
Carried interest typically sets aside 20% of a fund's total net realized gains to the venture capital firm.
Carried interest will continue to be taxed as long-term capital gains for hedge fund and private equity managers.
If and when all this works out the GPs get paid carried interest.
If the repeal passes, carried interest income will be re-characterized as ordinary income.
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The idea has merits carried interest does indeed look more like income than equity.
Some people assume that carried interest should be treated as salary and think it should be taxed as ordinary income.
My goal here is to lay out what carried interest is, how it works, and the business logic behind it.
These days more junior VCs are demanding, and getting, a piece of the carried interest, the industry's version of stock options.
Venture capitalism has done much better in America than Britain, although the incentive from carried interest is bigger in the latter.
The carried interest is paid when companies become liquid, only after the limited partners have been paid back all of their investment.
Charles Grassley, R-Iowa, have signaled that they are considering increasing taxes on the carried interest fees private equity firms charge their investors.
The bigger error: carried interest is profoundly different from a consulting fee.
Carried interest is a share of a partnership's profits that is taxed at capital-gains tax rates rather than at higher income-tax rates.
His measly million dollar salary is supplemented by forty million in carried interest income and another couple of million from personal investments.
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The fairest objection comes from venture-capital firms, says Mr Lerner, which depend more on carried interest than buy-out shops to incentivise managers.
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Like it or not, under existing tax law, carried interest is capital.
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Carried interest is really a bonus and should be taxed like one.
Many executives privately admit that carried interest is a grey area and should probably be taxed somewhere in between capital gains and income.
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Although the value is created through the promoters efforts the carried interest is taxed like a partnership interest when income and gain is recognized.
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Chuckles aside, the group opposes Rangel's proposed tax increases on "carried interest, " the 20% cut hedge fund and private equity managers earn on profits.
The carried interest loophole that allows hedge fund managers and private equity investors like him a 15% tax rate on most of their earnings?
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It is much closer to a performance fee than an equity stake (managers can only gain from the carried interest, which cannot be negative).
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