Clifford Chance

Proposed Treasury Regulations Would Affect Management Fee Waiver Arrangements

31 July 2015

The U.S. Treasury Department and the Internal Revenue Service (the "IRS") recently released proposed regulations (the "Proposed Regulations") that, if enacted, would set forth guidelines for determining whether certain partnership allocations should be recharacterized as payments for services.  The preamble to the Proposed Regulations also announced that the IRS intends to limit the application of certain guidance under which grants of partnership profits interests are not treated as taxable events to the recipient of the partnership interest, or the partnership.

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