Friday, June 15, 2007

Uncle Sam Has His Eye on Publicly Traded Partnerships

Per Market Watch:

Senate Finance Committee Chairman Max Baucus, D-Mont., and Charles Grassley, R-Iowa, introduced legislation this week that would require publicly-traded partnerships to be treated as corporations for federal tax purposes. Under current law, income distributions from publicly-traded partnerships are taxed at the capital-gains rate of 15% -- below the top corporate tax rate of 35%.

The senators said that allowing publicly-traded private-equity funds to enjoy favorable tax treatment would be unfair to other corporations. Their legislation was unveiled ahead of the initial public offering of Blackstone Group, one of the world's largest private-equity firms. It currently plans to list as a publicly-traded partnership and be taxed at 15%.

A 20% tax swing would have a huge effect on all publicly traded partnerships. Investors took notice today trading many PTP lower including (FIG).

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