

Sign Petition to stop Venture Tax - cgherb911
http://annualmeeting.nvca.org/index.php?option=com_content&view=article&id=61&Itemid=56

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anigbrowl
I was rather skeptical of this due to the absence of specific detail on what
was going to be taxed and how.

It seems reform proposals include the idea of taxing a _fund manager's_ share
of a fund's annual profits, known as 'carried interest' - a performance bonus
in addition to regular management fees, sometimes as high as 20% - as ordinary
income. Currently it is booked as capital gains, although the fund manager may
not have invested any capital. You can find out if a fund manager is invested
in their own fund by reading the 'Statement of Additional Information' (SAI)
on their website/prospectus.

 _Investors_ in a VC fund would continue to be taxed under capital gains
provisions, as they are now. Also, a fund manager's own capital investment in
a fund would be continue to be taxed as capital gains; only the amount paid as
a performance bonus for success in managing _other_ people's money would be
taxed as income. Losses would continue to be offsettable for tax purposes as
they are at present, it seems.

[http://www.businessweek.com/news/2010-05-13/senators-seek-
ve...](http://www.businessweek.com/news/2010-05-13/senators-seek-venture-
capitalist-waiver-from-fund-tax-update1-.html) has some additional
information, and
[http://webcache.googleusercontent.com/search?q=cache:WBne-r3...](http://webcache.googleusercontent.com/search?q=cache:WBne-r3bULsJ:www.icsc.org/government/toolkits/CI%2520Bill%2520Language.doc+%22carried+interest%22+thomas.loc.gov&cd=3&hl=en&ct=clnk&gl=us)
reprints the relevant language in the house bill.

