Quote:
Originally Posted by CaptainMidnight
I assume that the issue WTF is referring to here involves what is called "carried interest."
Why does the carried interest break still exist, you might ask? Various journalists began talking about it four years or so ago. (It's existed for a long time.) The reason, of course, is money. Greenwich hedge funds managers spread plenty of that around. Senators Clinton and Schumer (NY) ran interference for years.
|
not sure WTF ever knows what he refers to but.....
there is a concept in the law...called the "pooling of interests" doctrine
where two or more like-minded individuals come together to form a partnership for a business purpose, they "pool" together their various capabilties.
i ran into this years ago when i didnt have much money but a rich guy and i joined together to build an apartment complex in corpus christi.
he had the money and financing and i had some construction experience.
the irs audited me and tried to say i had income merely on the forming of the partnership. i said hey, no way....
anyway they finally gave up because theres a long standing ..or was maybe im not sure.... doctrine that says if people come together for the formation of a business venture and they bring different assets or capabilities to the joint venture, there is no income on the mere formation of a partnership because each person maintains their own capital as their investment. There is only income upon the ultimate success and realization of profits in the venture, not in its formation prior to any realized profit. otherwise people would get taxed on nothing, no success, nothing, just an agreement to do something.
the irs tried to say i had "earned" income by working in the partnership even though i didnt receive any money. well, some to live on, but i paid tax on that. they wanted me to pay tax on my work without getting any money. my partner, who had the money?... the irs didnt try to say he had income as the walls went up, so that was unfair to me to say i had income because money was being spent on the walls.
on a macro basis, theres two elements of this doctrine: 1. the syndicator and 2. the investor. if a syndicator should be taxed currently as the worth of a venture increases why isnt an investor taxed on the same basis? on the mere putting of money into a venture as work is done toward the ventures goal and his portion increases in value? the economy would shudder to a standstill if investors were taxed on investing.
its the same issue in the oil business, getting together money to be an independent and find a lease and drill a well. you raise money and you oversee the leasing, drilling and completion.
a few years later, i sold out my interest because i needed the money, and i had the type of gain that the characteristics of my investment rendered.
as far as romney is concerned, his syndicator days are far in the past. his income now is from being on the investor side and his capital gains that are of such feigned alarm to some are from investing.
