Spring 2018 issue of Horizons

For losses occurring prior to 2018, the old rules still apply. That is, the loss can offset 100% of future taxable income and cannot be carried forward more than 20 years. Carried Interest Carried interest is a contractual right usually detailed in an operating agreement’s waterfall provisions and entitles the general partner of a private equity fund to share in the fund’s profits, typically on the sale of the portfolio company. The general partner receives its “carry” for a commitment to provide investment management services.

While the media debated whether a carry should be taxed at ordinary or capital gain rates, the Act ends the debate by providing that the carried interest is eligible for capital gain rates if the carry is held for three years rather than the typical one year holding period for most capital assets. Viewed in its entirety, the Tax Cuts and Jobs Act represents a pro-growth plan that was needed for years. However, only the corporate and international provisions were made permanent. Most individual provisions, including the 20% pass-through deduction, are scheduled to sunset after December 31, 2025.

PRIVATE EQUITY SERVICES GROUP

RubinBrown offers private equity firms and their portfolio companies an integrated suite of business services aligned across the entire private equity life cycle. For more information, visit www.RubinBrown.com/Private-Equity .

Ben Barnes, CPA, CGMA Partner-In-Charge Private Equity Services Group 314.678.3531 ben.barnes@rubinbrown.com

Eric Janson, CPA Partner Private Equity Services Group 314.290.3295 eric.janson@rubinbrown.com

Jeff Naeger, JD, CPA Partner Private Equity Services Group 314.290.3461 jeff.naeger@rubinbrown.com

Jeff Sackman, CPA, CM&AA, CGMA Partner & Vice Chair Private Equity Services Group 314.290.3406 jeff.sackman@rubinbrown.com

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