On August 5, 2021, Senate Finance Committee Chairman Ron Wyden (D-OR) and Senate Finance Committee member Sheldon Whitehouse (D-RI) introduced the "Ending the Carried Interest Loophole Act" (the "Bill" or the "Proposal").

Managers of various types of investment funds that are structured as partnerships often receive a profits interest in the fund, commonly referred to as a "carried interest," in exchange for their services. Under general principles of partnership taxation, the carried interest can be issued by the partnership without current tax. The partner holds the interest as a capital asset and generally recognizes income only when the partnership disposes of its investments, realizes income from them, or when the partner sells its partnership interest. The character and timing of the income is generally determined by reference to the timing of recognition and character of profits made by the partnership. READ MORE