Fund Managers Face Tax Hike If Calif. Passes AB 2731
By Timothy Gustafson and Jessica Allen (June 20, 2018, 3:22 PM EDT) -- California's A.B. 2731 seeks to accomplish what the federal Tax Cuts and Jobs Act did not, namely, to close the carried interest "loophole." Currently making its way through state assembly committees, AB 2731 would impose an additional 17 percent tax on interest income derived from investment management services on taxpayers subject to California's personal income tax law.
The TCJA's Compromise
Prior to the passage of the TCJA, Internal Revenue Code Section 1061 provided investment fund managers with preferential tax treatment for partnership interests received in exchange for the performance of services related to raising capital or investments involving specified assets (i.e.,...
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