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Treasury Issues Proposed Regulations on Management Fee “Waiver” Mechanisms
29 July 2015
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Last week, the Treasury and the IRS issued proposed regulations relating to disguised payments for services rendered by a partner to a partnership.
The proposed regulations focus primarily on whether the payment to the service provider lacks “significant entrepreneurial risk.”
Although expected to target management fee “waiver” mechanisms, the proposed regulations are much broader and implicate other partnership arrangements, including the profits interest safe harbor of Revenue Procedure 93-27. They do not appear to modify the tax treatment of carried interest.
Peter A. Furci
Adele M. Karig
Matthew D. Saronson
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