Richard Morris: The Fate of CRE Investment Structures
Richard Morris spoke to Commercial Property Executive about the IRS's recently proposed rules reclassifying how private equity executives' management fees are taxed. Under the rules, firms will find it harder to convert their fees — which are taxed at high rates — into carried interest. Rick's Q&A explores how this change will impact the commercial real estate industry's investment structures. He wrote, "My primary concerns are the inconsistencies and imbalances that are created by the way this amendment seeks to increase tax revenue…The amendment disregards the fundamental distinction between a partner and an employee or contractor and adversely impacts the fundamental alignment of one of the most successful investment structures created by Wall Street."