16 Aug 2022
The Inflation Reduction Act of 2022 and “Carried Interest”
In the news is “carried interest”, which is taxed at a lower 20% capital gains rate, rather than the top 37% marginal tax rate that applies to ordinary income. The special rate on carried interest owes its continued existence in the tax code to Arizona Senator Kyrsten Sinema, who championed its continuation, not elimination, in return for her vote, helping secure passage of the Inflation Reduction Act of 2022, as recently signed by President Biden. Special tax treatment of carried interest is incentive to hedge fund partners, venture capitalists, and real estate partners to invest in longer-term and riskier projects that might be viewed less-favorably if those profits were taxed at the ordinary income tax rate.
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Practical Guidance Updates
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- Tax Key Legal Developments Tracker (Federal)
Stay informed on new developments:- Employment. IRS provides indexing adjustments for certain provisions under R.C. § 36B. Rev. Proc. 2022-34.
- Individual Income Tax. IRS issues revenue procedure, superseding Proc. 2017-34, and providing a simplified method for certain taxpayers to obtain an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to make a “portability” election under I.R.C. § 2010(c)(5)(A). Rev. Proc. 2022-32.
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- Share fundamental guidance with your firm’s summer associates to help them sharpen their research and writing skills, get the inside scoop on summer associate survival, and hit the ground running in the tax practice area. Review the resources in the Summer Associate Resource Kit: Tax.
- The Practical Guidance Journal Summer 2022 Edition features guidance on wage and hour issues related to remote and hybrid work.
- Listen up! Practical Guidance Podcast: NFTs: Copyright Infringement, Regulation, and Regulation Podcast. Hear from Holland & Knight’s Daniel Barsky as he discusses NFTs (non-fungible tokens) which have become all the rage. From a recent copyright lawsuit over Quentin Tarantino's NFT of unreleased Pulp Fiction materials, to the micro-investment possibilities in Banksy’s artwork, NFTs are in the news and do not appear to be going away. See all of our podcasts in the Practical Guidance Podcasts Resource Kit.
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