“President Biden is increasingly unlikely to get his corporate or individual tax hikes, at least without reconciliation, and most venture capital firms are keeping their fingers crossed instead of prepping tax avoidance strategies,” Axios reports.
“VC lawyers and CFOs have spent the past couple of months discussing new fund structures that could offset the elimination of carried interest’s beneficial tax treatment, as proposed last month by the U.S. Treasury Department.”
“The most popular suggestion is to create special purpose vehicles for a fund’s nonmarketable securities, contributed in-kind via general partners, thus effectively locking in the carried interest. This would essentially be a tax deferral scheme, with the hope that a future president would reverse the carried interest move and/or lower capital gains rates.”
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