>> If, as hedge fund managers are treated, their compensation is considered cap gain, I would close that little loophole to deny 500 million or more being taxed at cap gain rates.. If it's how they are paid, that is not cap gains...
You're confused. "Compensation" is, by definition, "Ordinary Income". Has been since the first Capital Gains law was enacted in 1921. So, I don't know where you get the idea that "hedge fund managers" have some exception (loophole) with respect to "compensation".
At issue is the "profits interest" these partners own. To undo this so-called "loophole" will require a near-total rewrite of Subchapter K, arguably one of the most complex areas in the entire Internal Revenue Code. There is NO DOUBT, WHATSOEVER, that rewriting this provision will result in MORE so-called loopholes.
The big question on my mind, however, is that if you deny capital gain treatment on these items will you also eliminate the STCL deduction limitation of $3,000? That, after all, is fundamental to the tax code: If you receive the favorable treatment for gains, you also get the loss limitation for losses. If you tax this money as ordinary income, you are essentially bound by decades of established law to allow the straight deduction for losses against ordinary income.
So, then we're going to have liberals bitching the first time one of these guys takes a $2 billion loss against his other income resulting in a huge NOL carryback and refunds on prior years.
Liberals just can't win. Enough is never enough. |
