President
Obama's new proposed budget is out, and it includes a call to eliminate what's
known as the carried interest provisions of the tax code. But what is carried
interest, and why should ordinary investors care about it?
In
the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at
carried interest and its impact on taxes. Dan notes that carried interest is a
way that many investment managers get paid, by taking a share of profits from
the investments they make. With the rise of private-equity firms Blackstone
Group (NYSE: BX )
, Apollo Global Management (NYSE: APO ) , KKR (NYSE: KKR ) , and Carlyle Group (NASDAQ: CG )
, carried interest has gotten a lot of attention because it enables managers to
pay lower long-term capital gains rates on what many would see as compensation
for their management services. But proponents argue that carried-interest
treatment is fair because the managers' investment is at risk. Dan concludes
that big fights about the provision have occurred in the past, and they're
likely to repeat themselves this time around as well.
Is Uncle Sam about to claim
40% of your hard-earned assets?
Thanks to a 2013 law called the American Taxpayer Relief Act, or ATRA, he can, and will, if you aren't properly prepared.
Fortunately,
The Motley Fool recently uncovered an arsenal of little-known loopholes to
protect yourself from ATRA and help keep the taxman at bay when he inevitably
comes calling. We reveal them all in a brand-new special report. Simply click
the following link below for instant, 100% free access.
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