Wednesday, May 14, 2014
New York (May 14, 2014) – Today The New York Times published and featured a regular Dealbook column by University of San Diego (USD) School of Law Professor of Law Victor Fleischer titled, "Why Hedge Funds Don’t Worry About Carried Interest Tax Rules." The article discusses how hedge funds managers go beyond carried interest to shelter enormous incomes.
Carried interest is a share of the profits of an investment or investment fund that is paid to the investment manager in excess of the amount that the manager contributes to the partnership. In the case of a private equity or venture capital fund, the investors make long-term investments that last more than one year. Thus, when the investment is sold at a profit, the income flows through to investors and managers as long-term capital gains, which are taxed at a lower rate than ordinary income.
"Hedge fund managers don’t use the carried interest tax loophole," said Fleischer in his article. "They need something more exotic."
Congress has closed tax loopholes over the years and is now discussing ways to close the carried interest loophole. Fleischer's article lays out the steps hedge funds managers have taken to find creative ways to continue to shelter income and pay less in taxes.
"So no matter what happens with the carried interest tax legislation, the chess match between tax collectors and fund managers will continue."
Read the full article on nytimes.com.
About Professor Fleischer
Victor Fleischer teaches and writes in the areas of partnership and corporate taxation, deals, tax policy and private equity. He was the ninth most cited tax law professor among U.S. law schools from 2005 to 2009 per Brian Leiter’s Scholarly Impact Study.
About the University of San Diego School of Law
Celebrating 60 years of alumni success, the University of San Diego (USD) School of Law is recognized for the excellence of its faculty, depth of its curriculum, and strength of its clinical programs. Each year, USD educates approximately 900 Juris Doctor and graduate law students from throughout the United States and around the world. The law school is best known for its offerings in the areas of business and corporate law, constitutional law, intellectual property, international and comparative law, public interest and taxation.
USD School of Law is one of the 81 law schools elected to the Order of the Coif, a national honor society for law school graduates. The law school’s faculty is a strong group of outstanding scholars and teachers with national and international reputations and currently ranks 23rd worldwide in all-time faculty downloads on the Social Sciences Research Network (SSRN). The school is accredited by the American Bar Association and is a member of the Association of American Law Schools. Founded in 1954, the law school is part of the University of San Diego, a private, nonprofit, independent, Roman Catholic university chartered in 1949.