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Carried Interest Debate (Wiki Page) (view source)
Revision as of 14:29, 8 June 2016
, 14:29, 8 June 2016no edit summary
|Primary Billing=Dr. Edward Egan
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Carried interest is a form of performance-based compensation that general partners of various types of private investment funds receive in exchange for their work. It is generally calculated as 20 percent of a fund's profits. The debate surrounding carried interest stems from revolves around its treatment in taxes. That is to say it It is treated as a capital gain for tax purposes rather than ordinary income, which involves it being taxed at a maximum rate of 20 percent rather than 40 percent and receiving an a perceived advantageous tax deferral.
==Private Investment Fund Definitions and Structure==
Before considering carried interest, one must first have a basic understanding of the organizations that currently benefit from it. Private investment funds, set up as limited liability companies or limited partnerships, invest capital in order to attain returns for investors. These funds are organized under general partners and limited partners. The general partners are the funds' managers or managing firms. The limited partners are the funds' investors who typically include pension funds, insurance companies, and wealthy individuals. Types of private investment funds consist of private equity funds, venture capital funds, and hedge funds.
