Taxation of Carried Interest

 

 

Carried interest is an important component of compensation for the members of the general partner in a private equity or venture capital fund. The taxation of carried interest has been discussed for a number of years. It can be taxed as capital gains as it is presently or it could be taxed as ordinary income as some have proposed.

Read the paper attached and share your thoughts regarding the appropriate taxation for carried interest and your reasons why.

 

Sample Solution

Taxation of Carried Interest

Carried interest is a contractual right that entitles the general partner of an investment fund to share in the fund`s profits. These funds invest in a wide range of assets, including real estate, natural resources, publicly traded stocks and bonds, and private businesses. Many commentators argue that it would be fairer and more efficient economically to tax carried interest like wage and salary income. Carried interest is a share of a private equity or fund`s profits that serve as compensation for fund managers. Because carried interest is considered a return on investment, it is taxed at a capital gains rate, and not an income rate.

In the Fifth Symphony, Shostakovich was demonstrating how the Communists could influence a composer’s writing yet still find a way to express his individual feelings. The Symphony is structured around a framework of several recurring melodic and rhythmic motives. It begins with an intense statement between the lower and upper strings. As the movement progresses more instruments are added, and the intensity increases. A melancholy melody is introduced by the first violins and replayed by the woodwinds over the first rhythmic theme. This could be viewed as the serious efforts of the workers as they persevere in building their country. The first thing the listener hears in the first five measures of the music is a very agitated melody from the strings. This motive serves as the most frequently occurring melodic and rhythmic component to the piece and is littered throughout the rest of the work. This rather intense melody quickly loses steam and dies off into the second frequently recurring melodic motive.  In this motive, Shostakovich outlines a Russian folk song in the Violin 1 part starting at rehearsal marking “1” in the attached score. To better reach his audience, he knew he had to incorporate ideas that they would recognize. Shostakovich uses an ostinato on a single pitch beginning in measure 25 to introduce what could be considered a dysphoric motif.   As the movement progresses, the tempo accelerates as well as the dynamics eventually evolving into a march style. This is an indication of the power of the Soviet machine working to a positive end or resolution at the end of the movement with an ascending chromatic glockenspiel solo. Below the surface the first movement screams of tragedy and sadness throughout the beginning section.  Giving up in the end to the oppression of the Soviet machine with a harsh militaristic step in the march introduced by the percussion. The waltzing scherzo feel of the second movement is cumbersome at times and at times comical or light. The waltzes are performed in a series of minor keys. Shostakovich uses dynamics to assist in producing a satirical effect. The listener may feel uncomfortable or agitated due to the intensity of the rhythms.  To the regime, this movement may have seemed joyous or amusing. Possibly the main focal point of the Fifth Symphony as a whole is the incredibly passionate and moving third movement. To achieve this level of

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