Bill > HR1735

Introduced Session

To amend the Internal Revenue Code of 1986 to provide for the proper tax treatment of personal service income earned in pass-thru entities. This bill modifies the tax treatment of carried interest, which is compensation that is typically received by a partner of a private equity or hedge fund and is based on a share of the fund's profits. (Under current law, carried interest is taxed as investment income rather than at ordinary income tax rates.) This bill includes provisions that set forth a special rule for the inclusion in gross income of partnership interests transferred in connection with the performance of services, treat as ordinary income the net capital gain with respect to an investment services partnership interest except to the extent such gain is attributable to a partner's qualified capital interest, exempt income from investment services partnership interests from treatment as qualifying income of a publicly traded partnership, exempt certain family partnerships from the application of this bill, increase the penalty for underpayments of tax resulting from failure to treat income from an investment services partnership interest as ordinary income, and include income and loss from an investment services partnership interest for purposes of determining net earnings from self-employment and applicable self-employment taxes. The bill defines "investment services partnership interest" as any interest in a partnership held by a person who provides services to a partnership by (1) advising the partnership about investing in, purchasing, or selling specified assets; (2) managing, acquiring, or disposing of specified assets; or (3) arranging financing with respect to acquiring specified assets.

AI Summary

Committee Categories

Bill Pascrell (D)*,  Don Beyer (D),  Earl Blumenauer (D),  Judy Chu (D),  Yvette Clarke (D),  Steve Cohen (D),  Joe Courtney (D),  Peter DeFazio (D),  Rosa DeLauro (D),  Eliot Engel (D),  Tulsi Gabbard (D),  John Garamendi (D),  Chuy García (D),  Raúl Grijalva (D),  Brian Higgins (D),  Joseph Kennedy (D),  Ro Khanna (D),  Barbara Lee (D),  Andy Levin (D),  Alan Lowenthal (D),  Grace Meng (D),  Jerry Nadler (D),  Grace Napolitano (D),  Eleanor Holmes Norton (D),  Alexandria Ocasio-Cortez (D),  Frank Pallone (D),  Mark Pocan (D),  David Price (D),  Max Rose (D),  Tim Ryan (D),  John Sarbanes (D),  Jan Schakowsky (D),  Tom Suozzi (D),  Mark Takano (D),  David Trone (D),  Bonnie Watson Coleman (D),  Peter Welch (D), 

Referred to the House Committee on Ways and Means. (on 03/13/2019)

Official Document