Law360, New York (February 10, 2017, 11:13 AM EST) -- The tax treatment of carried interest has for many years been a high-profile target for potential reform. "Carried interest" refers to the share of profits or gains from investment received by a manager of a private equity fund, hedge fund or similar investment vehicle, which is typically unrelated to any capital investment by the manager. Under existing law applicable to entities treated as partnerships for U.S. income tax purposes, carried interest is generally taxed at favorable long-term capital gain rates. Many lawmakers view this treatment as inequitable, under the premise that long-term capital gains should apply to returns from the investment of capital, rather than receipts for the provision of services. In the private equity world, proposed legislation to close the carried-interest "loophole" could have a profound impact on the economics and structure of investment funds and their portfolio companies....