IRS Releases Proposed Regulations Under Section 1061 on Carried Interest
On July 31, 2020, the Internal Revenue Service (“IRS”) issued a series of Proposed Treasury Regulations promulgated under Section 1061 of the Internal Revenue Code (the “Code”) (such regulations, the “Proposed Rules”). The Proposed Rules address a special three-year holding period requirement for investment managers to treat carried interest proceeds as eligible for preferential tax rates. Below is a high-level summary of the background giving rise to the Proposed Rules, along with their key provisions and implications.