Taxing times for private equity

It is January and you are holding an issue of PEI Manager. Therefore, you must be interested in the wide world of private equity tax issues.

As in previous years, we are starting 2008 with a topic that generates no end of nervousness and headaches for private equity firm managers (and no end of fees for the tax professionals who advise them).

The year just passed offered a robust refutation to anyone who felt that private equity taxes were a marginal issue to be monitored but not confronted head on. Some of the most dramatic stories in private equity during 2007 came with a tax headline. In South Korea, Lone Star continued to encounter trouble owing to the GP-friendly offshore tax structure it used to purchase Korea Exchange Bank. In the US, private equity got the attention of the public for all the wrong reason when Congress was shocked, shocked, to discover that private equity guys only pay 15 percent on something called carried interest.

This issue features a new format for us, a debate, in this case between two highly articulate tax experts representing each side of the US carry tax issue. We believe it’s the only debate on carried interest anyone will ever need to read.

We also are pleased to present three guest articles written by tax experts on the topics of UBTI, US-Canada taxes and UK tax avoidance. Much as we have confidence in the industry knowledge of the PEI Manager editorial team, there are some issues that even exhaustive reporting doesn’t do justice, hence the healthy dose of outside commentary.

Here’s to a successful and thriving New Year, in which profits are up and tax headaches are alleviated by the heroic efforts of your tax counsel.

Enjoy the issue,

By David SnowDavid.s@peimedia.com