About That Carried Interest Provision In the Tax Cut & Jobs Act

WASHINGTON, DC–One of the provisions of the Tax Cut & Jobs Act increased the holding period to qualify carried interest as a capital gain from 1 year to 3 years.

Or did it?

Stephen Sharkey, a partner at DLA Piper, has his doubts based on a technical reading of the new tax law. “When you look at the language of the bill, you will see there is a cross reference to a capital asset. Well, guess what — technically under the tax code real estate used in a trade or business is not a capital asset. It is what folks refer to as a 1231 asset and it has a special code provision under which you get capital gain treatment for commercial real estate even though it’s not a capital asset.”

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Posted Under: CBOR News