Rep. Levin Introduces New Carried Interest Bill

April 3, 2009

 

On April 3, 2009 House Ways and Means Committee member Sander Levin (D-Mich.) introduced a new carried interest bill, H.R. 1935.  The thrust of the bill is similar to the versions introduced by Rep. Levin and Ways and Means Committee Chairman Rangel in the 110th Congress, taxing all income from a "investment services partnership interest" as ordinary income.   

Under the Levin bill, carried interest treated as ordinary income under this rule would not be considered qualifying income for a PTP--however, this version specifically states that PTP general partners which are themselves PTPs are exempted from this rule as long as substantially all their income is ordinary income or section 1231 gain (generally, income from coal or timber holdings). This language ensures that the partnership status of the  ten GP MLPs will not be affected by the carried interest legislation.  The bill provides a ten-year provision for PTPs such as Blackstone and Fortress that would be affected by the legislation.

Although carried interest legislation was part of President Obama's budget, it may well not be acted upon until later this year or next year, when the financial markets are in better condition.  For the text of the bill, click here.