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New Tax Law (H.R. 1): Key Highlights for Private Investment Funds

By Arnold P. May, Amanda H. Nussbaum, Brian Huber & Marguerite Lombardo on January 10, 2018
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H.R. 1, commonly referred to as the Tax Cuts and Jobs Act, implements sweeping changes to the U.S. tax system. These changes will alter the fundamental tax principles upon which many investment and organizational decisions by the private investment industry were made.

Lawyers in our Tax and Private Investment Funds groups hosted a 1-hour webinar highlighting the key provisions of the new tax law, its implications on the private investment industry, and action items for the private investment community in the coming year and beyond.

Key changes include:

Tax Rates/Taxable Income

  • 21% corporation; 37% individuals
  • Non corporate taxpayers eligible for 20% deduction of certain pass through income
  • Carried interest rule
  • Non-U.S. persons subject to tax on gains from sale of pass through entities that conduct a U.S. business
  • U.S. corporations not subject to tax on certain foreign source dividends

Deductions

  • Elimination of certain previously itemized deductions
  • Limitation on NOLs
  • Limitation on tax exempts to use losses to offset other income
  • Accelerated depreciation
  • Limitation on interest deductions

View the full webinar.

Photo of Arnold P. May Arnold P. May

Arnold P. May is a partner in the Tax Department and a member of the Private Funds Group. His practice focuses on tax planning for private equity fund managers in connection with their fund-raising and internal organizational matters, as well as investment activities.…

Arnold P. May is a partner in the Tax Department and a member of the Private Funds Group. His practice focuses on tax planning for private equity fund managers in connection with their fund-raising and internal organizational matters, as well as investment activities.

In addition, Arnold represents U.S. and non-U.S. investors in connection with their investments in venture capital funds, buyout funds, hedge funds and other investment partnerships. In this capacity, as well as in connection with advising private equity funds with respect to their investment activities, he regularly advises on international tax issues that arise in connection with investments in the U.S. by non-U.S. investors (including non-U.S. investors subject to special U.S. tax treatment, such as governmental pension plans and tax-exempt organizations), as well as investments outside of the U.S. by U.S. persons. Arnold also has significant experience structuring tax-free and taxable mergers and acquisitions (including cross-border transactions), equity compensation arrangements and innovative financing techniques for investments in tax transparent entities such as partnerships, limited liability companies and Subchapter S corporations.

Arnold is a frequent speaker at industry conferences, including Financial Research Associates Tax Practices for Private Equity Funds, Institute for International Research Private Equity Tax Practices, Private Equity International Strategic Financial Management for Private Equity Firms, and Private Equity CFO Association. Highly-regarded for his thought leadership, Arnold is the editor of Private Equity International‘s “US Tax Considerations for Investment Fund Structuring”, which was published in August of 2015. He also co-authored an article on “Management Company Structuring” (with Scott Jones) for the April 2008 Private Equity International Fund Structures Supplement.

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Photo of Amanda H. Nussbaum Amanda H. Nussbaum

Amanda H. Nussbaum is a partner in the Tax Department and also is a member of the Private Investment Funds Group. Her practice concentrates on planning for and the structuring of domestic and international private investment funds, including venture capital, buyout, real estate…

Amanda H. Nussbaum is a partner in the Tax Department and also is a member of the Private Investment Funds Group. Her practice concentrates on planning for and the structuring of domestic and international private investment funds, including venture capital, buyout, real estate and hedge funds, as well as advising those funds on investment activities and operational issues. She also represents many types of investors, including tax-exempt and non-U.S. investors, with their investments in private investment funds.Business partners through our clients’ biggest challenges, Amanda is a part of the Firm’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team helping to shape the guidance and next steps for clients impacted by the pandemic.

Amanda has significant experience structuring taxable and tax-free mergers and acquisitions, real estate transactions and stock and debt offerings. She also counsels both sports teams and sports leagues with a broad range of tax issues.

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Photo of Brian Huber Brian Huber
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  • Posted in:
    Tax
  • Blog:
    Tax Talks
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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