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January 22, 2021

In his latest article for, partner Kevin Matz discusses the Internal Revenue Service’s final regulations under Internal Revenue Code Section 1061 concerning the income taxation of carried interests in private investment funds. The final regs depart significantly from the proposed regulations released on July 31, 2020 on issues near and dear to the estate-planning and family office community and clarify that gifts to related persons, including to non-grantor trusts, within IRC Section 1061’s prescribed 3-year window won’t constitute a triggering acceleration event to cause deemed short-term capital gains. The final regs also confirmed the proposed regs’ favorable treatment of transactions with grantor trusts as not being subject to Section 1061.

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