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Carry on! IRS Provides Carried Interest Reporting Requirements for Certain Passthroughs and Taxpayers

December 01, 2021 (2 min read)

The IRS provides guidance, in the form of FAQs, for the reporting by certain passthrough entities and taxpayers of carried interests, which are partnership interests that are held in connection with the performance of services. The FAQs provide guidance on the information that various passthrough entities must report to holders of applicable partnership interests (APIs), how an owner taxpayer calculates the short-term capital gains under I.R.C. Section 1061, how an owner taxpayer calculates and reports the “Recharacterization Amount”, and how an owner taxpayer reports collectible gains and unrecaptured I.R.C. Section 1250 gains. Section 1061 Reporting Guidance FAQs.

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