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  • videocam On-Demand
  • signal_cellular_alt Intermediate
  • card_travel Tax Law
  • schedule 90 minutes

Navigating IRS Carried Interest Regulations: Significant Tax Rules and Planning Opportunities

$347.00

This course is $0 with these passes:

CLE
CPE
ALL
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Description

IRC Sec. 1061 increases the holding period required for long-term capital gains treatment in respect of “carried interests” (also referred to as profits interests) from more than one year to more than three years. The impact of the three-year holding period could be burdensome to hedge funds, private equity, and real estate fund managers.

There is controversy over carried interest because the tax rules allow hedge funds, private equity, and real estate professionals to pay U.S. federal income tax on carried interest allocable to long-term capital gains at the favorable long-term capital gains tax rate instead of the higher tax rate applicable to compensation income or income for services. IRC Sec. 1061 in effect increases the required long-term capital gains holding period with respect to an "applicable partnership interest" from more than one year to more than three years. The definition of an “applicable partnership interest” is designed to capture “carried interests,” i.e., interests in partnerships granted to individuals in connection with the performance of substantial services by the taxpayer or a related person, which are to be distinguished from “capital interests” that are granted to individuals for invested capital. Advisers must identify interests subject to IRC Sec. 1061 for tax planning purposes.

In 2021, the IRS and the Treasury issued final regulations applicable to IRC Sec. 1061 which include certain significant changes to the proposed regulations issued in 2020. The final rules include revisions to (1) the “capital interest” gains and losses and exceptions, (2) the applicability of IRC Sec. 1061 to gains on the sale of API and distributed API property, and (3) transfers of APIs to related parties in a nonrecognition transaction. Tax counsel and advisers must identify critical issues stemming from these regulations and plan accordingly.

Listen as our panel discusses the requirements of IRC Sec. 1061, determining API subject to the holding requirements, key planning issues for IRC Sec. 1231 properties, and tax planning techniques to maintain favorable tax treatment of carried interest.

Presented By

Ethan R. Goldman
Partner
Davis Polk & Wardwell LLP

Mr. Goldman advises clients on federal income tax matters related to a variety of transactions, including U.S. and cross-border mergers, acquisitions, joint ventures, financings, partnership investments, restructurings and spinoffs. He also regularly advises private equity sponsors and other private fund managers on tax matters relating to the formation and operation of private investment funds, as well as secondary transactions. Mr. Goldman has also represented clients in connection with tax controversy matters before the Internal Revenue Service and the U.S. Tax Court.

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Erez I. Tucner
Shareholder
Greenberg Traurig LLP

Mr. Tucner serves as the Chair of the New York Cross-Border Tax Planning Practice. He is an experienced business and tax lawyer who focuses on structuring and negotiating the legal, business and tax aspects of complex multimillion-dollar domestic and cross-border mergers and acquisitions. Mr. Tucner has wide-ranging experience with the structuring and formation of domestic and offshore private equity funds, family offices, and hedge funds and their investments in the United States, Latin America, Europe, Israel and worldwide. He counsels high-net-worth individuals on their businesses, investment assets, and real property (including U.S. real property planning under FIRPTA). Mr. Tucner also represents corporate and individual taxpayers in tax audits and other tax controversy matters.

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Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 90-minute webinar is accredited for 1.5 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).


  • Live Online


    On Demand

Date + Time

  • event

    Tuesday, April 16, 2024

  • schedule

    1:00 p.m. ET./10:00 a.m. PT

  1. Overview of the requirements of obtaining capital gains treatment under IRC Sec. 1061
  2. Impact of IRS regulations and guidance
  3. Determining "applicable partnership interest" and "applicable trade or business"
  4. Applicability of IRC Sec. 1061 to IRC Sec. 1231 property
  5. Planning ideas for avoiding IRC Sec. 1061 three-year holding period
  6. Best practices for compensation arrangements in light of holding requirements under IRC Sec. 1061

The panel will review these and other noteworthy issues:

  • Treatment of carried interest and performance of services under IRC Sec. 1061, the IRS regulations promulgated thereunder and applicable guidance
  • Available tax planning techniques and strategies for partnerships and fund managers for more favorable tax treatment
  • Determining partnership interest that is API subject to IRC Sec. 1061
  • Understanding key planning issues regarding the applicability of IRC Sec. 1061 to IRC Sec. 1231 property (including rental real estate)
  • Potential planning opportunities presented by special allocations, transfers to unrelated parties, capital contributions, and distributions
  • Best practices in ensuring favorable tax treatment in compensation arrangements involving carried interest

Learning Objectives

After completing this course, you will be able to:

  • Understand the treatment of carried interest and performance of services under IRC 1061
  • Understand critical provisions of the IRS final regulations
  • Ascertain available tax planning techniques and strategies for partnerships for more favorable tax treatment
  • Recognize partnership interest that is "applicable partnership interest" subject to IRC Section 1061 holding requirements
  • Understand key planning issues regarding the applicability of IRC 1061 to 1231 property
  • Ascertain planning opportunities presented by special allocations, transfers to unrelated parties, capital contributions, and distributions
  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business, legal or public firm experience at mid-level within the organization, involved in sophisticated tax planning and reporting; supervisory authority over other attorneys/preparers/accountants. Knowledge and understanding of partnership and other pass-through entities, IRC 1061, 1231; familiarity with tax planning for hedge funds, private equity, and real estate professionals.

BARBRI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

BARBRI CE webinars-powered by Strafford-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .