"In the Know": Carried Interest and Municipal Bonds

When this article was being written, the debate continued in Washington regarding the tax rate on carried interest. Today, it is taxed at the capital gains rate, but there is an outcry from some for it to be taxed at a higher rate. Such legislation is far from certain, but important to note in your discussions with clients who are venture capitalists. Look for the "sign here" line of your clients' Form 1040 to identify their occupations.

In more Washington news, the U.S. Supreme Court has agreed to hear The Commonwealth of Kentucky versus Davis in its next session. Why should you be "in the know" about this case? The reason is that the Supreme Court has set the stage for a decision with nationwide impact on the existing practice of approximately 40-plus states that give more favorable tax treatment to interest on municipal bonds issued by their state than interest on municipal bonds issued by other states. As such, the decision could influence the entire tax-exempt market.