Investment fund managers may be forced to pay higher tax rates on income from their investment funds if a bill introduced in the House of Representatives on Friday, June 22, 2007 becomes law.  The bill (H.R. 2834) would cause income received in respect of certain “carried interests” in partnerships to be taxed as ordinary income.  Currently, such income retains its character realized at the partnership level, which is often capital gain.  This change would likely increase the federal income tax on income from a carried interest from 15% to 35%. 
 
To view a Client Advisory concerning this issue by Edwards Angell Palmer & Dodge’s Tax Practices Group, please click here.