New Carried Interest Rules for Investment Funds: Analysis, Planning Opportunities and Pitfalls

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Wednesday, July 17, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will examine the new three-year holding period requirement for carried interests under IRC 1061 and discuss structuring techniques that can preserve long-term capital gains treatment for private equity and hedge fund managers notwithstanding the new tax reform rules.


Investment fund managers often participate in a portion of the investment fund's profits through a "carried interest" structured as a partnership interest in the investment fund. As a partnership interest, the U.S. federal income tax treatment of carried interest is based on the character of income earned by the fund. For fund managers, new IRC 1061 may increase the holding period required for long-term capital gain treatment from one year to three years.

While future corrective legislation and agency interpretations may limit 1061 planning opportunities, several techniques may be available to preserve long-term capital gains treatment for investment fund managers. Planning could include alterations to the overall business deal such as restricting the types of gains the carried interest will share in, or permitting the fund manager to waive the right to participate in gains from certain investments but be made whole from other fund income and gains. Counsel should consider structural adjustments both to how an investment is made as well as the form of an exit.

Listen as our panel examines the new three-year holding period requirement for carried interests under IRC 1061 and discusses the planning opportunities that may be available for private equity and hedge fund managers to preserve long-term capital gains treatment based on a one-year holding period rather than the three years outlined in 1061.



  1. Carried interests before and after tax reform: new IRC 1061
  2. Tax planning opportunities
    1. Contributing capital in connection with the issuance of carried interests
    2. Transfer of carried interests to unrelated parties
    3. Distributing appreciated assets to holders of carried interests
    4. Special allocations
    5. Qualified dividends and 1231 property


The panel will review these and other critical issues:

  • What is the scope of IRC 1061?
  • What are some alternative approaches that tax counsel should consider to preserve long-term capital gains treatment?
  • How does IRC 1061 impact qualified dividends and gains from the sale of property taxed under IRS 1231 and how might that impact tax planning under IRC 1061?


Huber, Brian
Brian D. Huber

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian

Mr. Huber supports venture capital and growth equity fund managers on all aspects of the fund lifecycle. He has...  |  Read More

Naylor, Jeremy
Jeremy Naylor

Proskauer Rose

Mr. Naylor is a member of the firm’s Private Funds Group. He works with private investment fund sponsors and...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video