Partnership Profits and Carried Interests: Will They Survive Congressional Scrutiny?
Robert McElroy, Matthew C. Marshall - McGuireWoods
June 11, 2007
The number of newly formed partnerships and limited liability companies has increased dramatically in recent years. This is evident with private equity funds, technology ventures, real estate developers, and others. The increase results, in part, from the expanded usage of variable equity interests, such as profits and carried interests, preferred returns, guaranteed payments, options, warrants, restricted equity grants, and various catch-up and waterfall allocation and distribution rights. Used properly, these variable equity interests allow investors and managers to structure ventures in a highly tax efficient manner.
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