Overview
Carried interest is a crucial yet complex area for fund managers. It’s a form of compensation where fund managers receive a share of profits from investments, typically taxed at capital gains rates. Our goal is to reduce the tax burden through strategic tax planning and compliance, preserving more of your profits.
Understanding Carried Interest
Carried interest represents profits allocated to fund managers for successful investment performance. However, these profits are treated differently from ordinary income, taxed at lower capital gains rates (20% long-term vs. higher short-term rates). Mismanagement can lead to costly tax obligations.
Strategies to Reduce the 20% Tax Rate
With proper structuring and planning, it’s possible to reduce the effective tax rate on carried interest. By implementing deferral techniques and structuring profits to qualify for long-term capital gains treatment, we ensure that you keep more of your earnings.
Long-Term vs. Short-Term Gains Management
Timing plays a crucial role in tax savings. By ensuring that your profits meet the long-term capital gains requirements (typically a holding period of more than one year), we help you avoid the higher short-term tax rates that can erode your earnings.
Carried Interest Waiver Strategies
Carried interest waivers allow fund managers to defer income until it qualifies for favorable long-term capital gains treatment. Our team structures these waivers in a way that maximizes tax benefits while maintaining compliance with IRS rules.
