Ending the Carried Interest Loophole Act

This bill changes federal tax rules for partnership interests that people receive in exchange for services, such as interests held by managers of investment funds that deal in securities, commodities, or rental and investment real estate. Each year, holders of these interests would have to report a calculated "deemed compensation amount" as ordinary income, based on an interest rate equal to a set federal bond rate plus 9 percentage points applied to the share of other partners' invested capital tied to their profit share. They would also be treated as having a long-term capital loss of the same amount. People who receive a partnership interest for services would be treated as including its value in income at the time of transfer unless they choose otherwise. The bill repeals the current three-year holding period rule in section 1061, requires partnerships to report deemed compensation amounts to the IRS and to partners, and adds faster income inclusion when such an interest is sold within a 10-year period.

Full text and official record on Congress.gov

Sponsors

• Ron Wyden Democrat sponsor
• 14 cosponsors