Congressman Takes Notes of Carried Interest's Impact on Real Estate Industry

Congressman Tom Reynolds (R-NY) selected Allen Matkins attorney Bill Ahern's quote regarding the potential impact of carried interest on the real estate industry as the 8/21/07 "Quote of the Day" on his blog, "From Wall Street to Main Street."

Reynolds, a member of the House Ways and Means Committee, describes the site as a pro-private equity blog that looks to examine central economic issues before public legislative debate later in the year.

Representative Sander Levin (D-MI) recently introduced House Bill 2834 into Congress, which if enacted would tax all income attributable to a carried interest (i.e., a developer's promote) as ordinary income. As you may know, the law currently provides that if a partnership holds a capital asset and sells that asset, the sponsor or developer would normally be entitled to claim capital gain on any distributions associated to its carried interest. If enacted, HB 2834 will add Section 710 to the Internal Revenue Code to treat such distributions as ordinary income.