S.Amdt. 4475

The amendment, titled the Ending the Carried Interest Loophole Act, aims to change how the tax code handles partnership interests given to people for performing services.

The purpose of this amendment is to add new rules to the Internal Revenue Code of 1986 to change how these interests are valued and taxed:

• Valuation of Interests: It changes the rules for when a partnership interest is transferred for services, treating the fair market value as the amount a partner would receive if the partnership sold all assets for cash and liquidated.

• Income Treatment: It creates a system where taxpayers holding applicable partnership interests must include a deemed compensation amount in their gross income as ordinary income.

• Capital Loss: Taxpayers who must report this ordinary income are treated as having a long-term capital loss equal to that same amount.

• Applicable Trade or Business: These rules specifically target activities involving raising or returning capital and investing in or developing specified assets (such as securities, commodities, and real estate held for investment).

• Removal of Old Rules: The amendment strikes section 1061 from the Internal Revenue Code.