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Real Estate & Construction

Treasury Department Proposes Changes to Carried Interest Rules

Addressing the complication of determining when an arrangement between a partnership and partner establishes a “disguised payment for services,” the Treasury Department has issued proposed tax regulations that would prohibit the fund arrangements some observers describe as an abusive use of the carried interest rules. Per the proposed changes, a taxpayer must prove a significant entrepreneurial risk is present to avoid the distribution being regarded as a disguised payment for services. The Real Estate Roundtable, which has a history of opposing Congressional carried interest proposals such as a recent amendment that was rejected by the U.S. Senate, has its Tax Policy Advisory Committee currently reviewing the proposed guidance’s impact on the real estate industry.

For the full story on the Treasury’s proposed tax regulations, please visit the Real Estate Roundtable’s website. Cherry Bekaert’s Real Estate & Construction industry group is also available to provide guidance on this matter.