United States

Chairman Brady adds new amendment to House bill

Carried interest holding period extended, among other changes

TAX ALERT  | 

On Nov. 6, the House Ways and Means Committee’s first day marking up the newly released tax reform bill, Chairman Brady released a new amendment to the bill containing a significant change to the treatment of carried interest.

Chairman Brady’s latest amendment would extend the capital gains holding period to three years for capital gains from carried interests. It is still possible that longer holding periods will be proposed as the bill works its way through the process.

In addition, the amendment includes new compliance rules for the earned income tax credit, continues the exclusion for dependent care assistance programs and preserves the treatment of self-created musical compositions and copyrights in musical works as capital assets. Further, the amendment allows the deferral of gain on the exercise of stock options by employees for up to five years if the corporation’s stock is not publicly traded.

Lastly, the amendment updates the base erosion provisions in several respects, including relating to foreign affiliates, modifies the provisions for taxing foreign high returns to clarify the scope of existing exceptions for certain activities and refines the calculation of the deemed repatriation tax.  

The text of the amendment can be found here.

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