Posted on Monday, March 8, 2010
Under current law, the carried interests of general partners in real estate partnerships are taxed at capital gains rates (currently 15%). In 2008 and 2009, the House passed legislation that changed the rule so that carried interests in real estate partnerships (and many other investment arrangements, as well), would be taxed as ordinary income. This provision has been very controversial. To date, the Senate has been unwilling to pursue this particular provision. The revenues generated from the provision have been used to "pay for" expired tax provisions.
In the wake of the change in leadership of the Ways and Means Committee, Congressman Sander Levin (D-MI) has assumed the role of acting Chairman. Mr. Levin has been the leading proponent of changing the carried interest rules to impose ordinary income treatment on these gains. In taking the gavel, he has announced his intent to continue to press for the enactment of this provision. It remains a high priority for him. From NAR