3-Year Holding Period Rule for ‘Carried Interests’ Addressed in IRS Proposed Regulations

On July 31, 2020, the Department of Treasury and IRS issued proposed regulations that provide guidance to the “carried interest” rules under Section 1061 of the Internal Revenue Code. Long-term capital gains derived by individuals are subject to a preferential 20% US federal income tax rate (plus 3.8% “net investment income” tax after certain income thresholds are met).  On the other hand, individuals are subject to US federal income tax on short-term capital gains at the graduated ordinary income tax rates with a maximum tax rate of 37% (plus 3.8% “net investment income” tax after certain income thresholds are met).

Continue reading the full GT Alert, 3-Year Holding Period Rule for ‘Carried Interests’ Addressed in IRS Proposed Regulations.