MPI Published in The TaxStringer:
IRS Proposes Additional Rules Applying to Private Equity Management Fee Waivers
MPI's Todd Povlich delves into a recent set of proposed regulations from the IRS that would clamp down on private equity firms' ability to use management fee waivers, a mechanism often employed to gain tax efficiencies. This article outlines the proposed regulations, which do not constitute the death of such waivers, but rather clarify what arrangements may be classified as disguised payments for services. The new regulations may meaningfully alter the attractiveness of waiver mechanisms, and Povlich therefore recommends they be reviewed by private equity firms and their advisors.