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City Kills Plan to End Hedge Fund Tax Break

New York Observer – The New York City Department of Finance is backing off a proposed policy change that would have increased the tax liability of hedge funds and private equity firms, according to an article published by Tax Analysts.

The city currently levies an unincorporated business tax of 4 percent on management fees collected by private investment firms, but considers income from carried interest to be exempt from the UBT. Hedge funds, meanwhile, typically structure their businesses as two legal entities: One that performs management services and collects management fees, and another that owns carries interest.

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