Wyden Tax Proposal: Effects on Mutual Funds, Exchange-Traded Funds & Publicly-Traded Partnerships | Dechert LLP

Senator Ron Wyden (D-Oregon), chair of the Senate Finance Committee, launched on September 9, 2021, draft tax laws (discover hyperlinks to the textual content right here and a abstract right here) that might straight affect the tax therapy of mutual funds, exchange-traded funds (“ETFs”) and publicly-traded partnerships (“PTPs”) and their buyers. 

The proposed laws would require mutual funds and ETFs, that are taxed as regulated funding corporations, to acknowledge acquire when redeeming in-kind appreciated portfolio investments.  ETFs specifically rely on the present tax-free nature of such in-kind redemptions of their routine day-to-day operations.  

The proposed laws would additionally eradicate the pass-through tax therapy relevant to sure PTPs together with grasp restricted partnerships (“MLPs”).  Currently, PTPs that earn sure varieties of funding or passive revenue are taxed as move by means of entities for revenue tax functions.  This proposal would eradicate the pass-through therapy for such entities and impose a company revenue tax on the entity stage.  

Both proposals as drafted can be efficient for tax years starting after December 31, 2022.

The draft tax laws contains sure different provisions, most of which might have an effect on the revenue tax guidelines for partnerships extra usually.


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