Bill > HR2686

This bill, the Ending Wall Street Tax Giveaway Act, proposes to amend the Internal Revenue Code to change the tax treatment of personal service income earned in pass-through entities. The key provisions of the bill are: 1. It modifies the election to include partnership interests in gross income in the year of transfer, treating the fair market value of such interests as equal to the amount the partner would receive if the partnership sold all its assets and distributed the proceeds. 2. It adds a new section 710 to the tax code that establishes special rules for partners providing investment management services to partnerships. This includes treating certain net capital gains as ordinary income, limiting the deductibility of net capital losses, and treating gains on the disposition of investment services partnership interests as ordinary income. 3. It makes conforming amendments to other sections of the tax code, such as applying the self-employment tax rules to investment services partnership income or loss, and imposes a 40% penalty on certain underpayments related to the avoidance of these new rules. The overall aim of the bill is to change the tax treatment of income and gains derived from providing investment management services through partnerships, in order to prevent what the bill's sponsors view as a "tax giveaway" to those in the investment management industry.