The Impact of IRC Section 1061 on Carried Interest: Key Tax Planning Considerations

Christopher Fiore Marotta
Christopher Fiore Marotta | Holland & Knight

Mr. Marotta assists clients with a range of domestic and international tax issues, including in relation to negotiating and structuring the purchase and sale of businesses, negotiating loan agreements for lenders and borrowers, drafting joint venture agreements.

Live Video-Broadcast: April 4, 2025
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Program Summary

This program delves into the code provisions and tax regulations pertaining to carry interest under IRC Section 1061, introduced in late 2017 as part of a broader package commonly referred to as the Tax Cuts and Jobs Act (TCJA). The program explores the fundamental changes to carried interest treatment, including the three-year holding period, calculation requirements, and structure and compliance considerations. Participants should gain insight into the federal reporting requirements, related tax planning considerations and areas that have not yet been resolved by current guidance.

Key topics to be discussed:

  • Fundamental changes in carried interest tax treatment
  • Exceptions
  • Calculation aspects and look-through rules
  • Structuring considerations and anti-abuse rules
  • Tax reporting and planning challenges

Date / Time: April 4, 2025

  • 1:00 pm – 2:00 pm Eastern
  • 12:00 pm – 1:00 pm Central
  • 11:00 am – 12:00 pm Mountain
  • 10:00 am – 11:00 am Pacific

Closed-captioning available

Speakers

Christopher Fiore Marotta | Holland & Knight

Christopher Marotta is a tax attorney in Holland & Knight’s Boston office. Mr. Marotta assists clients with a range of domestic and international tax issues, including in relation to negotiating and structuring the purchase and sale of businesses, negotiating loan agreements for lenders and borrowers, drafting joint venture agreements (including with respect to real estate matters), advising insurers on representation and warranty policy coverage, structuring inbound and outbound investments, forming investment funds, drafting United States tax disclosures for private placement memoranda and public offerings, and other issues relating to mergers, acquisitions and reorganizations.

Prior to joining Holland & Knight, Mr. Marotta advised private equity and corporate clients on the aspects of bankruptcies and domestic and multinational mergers and acquisitions in the New York office of an international law firm. He also has experience of providing advice on the structuring of investments overseas and domestic target companies and other domestic and international tax matters from working in the New York office of an international accounting firm.

In 2017, Mr. Marotta received the editor’s prize from the American Bankruptcy Law Journal for an article analyzing the use of bankruptcy examiners. He also has been published in the Banking Law Journal, Bloomberg Tax Management Memorandum and the Journal of Intellectual Property Law & Practice.

Agenda

I. Fundamental changes in carried interest tax treatment | 1:00pm – 1:10pm

  • Key provisions of IRC Section 1061 under the Tax Cuts and Jobs Act (TCJA)
  • The three-year holding period requirement and its practical implications
  • Specific impacts on hedge funds, private equity, and real estate fund managers

II. Exceptions | 1:10pm – 1:20pm

  • Income categories excluded from Section 1061
  • Corporate exception and application
  • Capital interest classification

III. Calculation aspects and look-through rules | 1:20pm – 1:30pm

IV. Structuring considerations and anti-abuse rules | 1:30pm – 1:45pm

  • Summary of relevant anti-avoidance provisions
  • Structuring considerations

V. Tax reporting and planning challenges | 1:45pm – 2:00pm

  • IRS reporting requirements
  • Practical planning considerations

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