even though the dems as a group have been trying to close this loophole, some bought dems and the repugs have always voted it down
WASHINGTON (Reuters) - U.S. tax authorities took no formal action after launching a probe five years ago of tax strategies used by private equity managers at firms such as Bain Capital LLC, leaving a legal gray area that is now being examined by New York's attorney general.
In a move focusing more scrutiny on private equity at a politically turbulent time, New York Attorney General Eric Schneiderman has subpoenaed documents from at least a dozen firms about how they reduce their managers' tax bills, a source familiar with the matter told Reuters.
Among firms subpoenaed, in addition to Bain, were KKR & Co LP, TPG Capital LP, Apollo Global Management LLC and Silver Lake Partners LP, a source told Reuters.
Schneiderman is investigating "management fee waivers," in which private equity managers convert portions of their pay into investment income, reducing the tax rate on that pay to 15 percent. That is the same rate they pay for "carried interest," a related form of investment gain that the managers get from the business of buying, managing and selling companies.
The tax status of carried interest has drawn fire for years from Democrats in the U.S. Congress who argue the gains should be taxed as ordinary income. The private equity industry and their allies have blocked such a change, arguing that carried interest carries risks and deserves investment tax treatment.
A spokesman for the U.S. Internal Revenue Service said on Monday the agency had no immediate comment on the issue.
http://news.yahoo.com/irs-warned-did-not-act-tax-strategy-private-202019424--sector.html
WASHINGTON (Reuters) - U.S. tax authorities took no formal action after launching a probe five years ago of tax strategies used by private equity managers at firms such as Bain Capital LLC, leaving a legal gray area that is now being examined by New York's attorney general.
In a move focusing more scrutiny on private equity at a politically turbulent time, New York Attorney General Eric Schneiderman has subpoenaed documents from at least a dozen firms about how they reduce their managers' tax bills, a source familiar with the matter told Reuters.
Among firms subpoenaed, in addition to Bain, were KKR & Co LP, TPG Capital LP, Apollo Global Management LLC and Silver Lake Partners LP, a source told Reuters.
Schneiderman is investigating "management fee waivers," in which private equity managers convert portions of their pay into investment income, reducing the tax rate on that pay to 15 percent. That is the same rate they pay for "carried interest," a related form of investment gain that the managers get from the business of buying, managing and selling companies.
The tax status of carried interest has drawn fire for years from Democrats in the U.S. Congress who argue the gains should be taxed as ordinary income. The private equity industry and their allies have blocked such a change, arguing that carried interest carries risks and deserves investment tax treatment.
A spokesman for the U.S. Internal Revenue Service said on Monday the agency had no immediate comment on the issue.
http://news.yahoo.com/irs-warned-did-not-act-tax-strategy-private-202019424--sector.html