Carry interest in futures hedge fund

Discussion in 'Professional Trading' started by gpiu, Jul 1, 2012.

  1. gpiu



    I have a question concerning carry interest when the partnership derives its income solely from short term futures transactions. I would presume the limited partners are taxed at the futures rate plus state income tax. How is the carry interest treated for the general partner?
    At what rate is the compensation taxed, short term ordinary or futures + state?
  2. clerk


    Assuming all capital accounts are positive, all items of income retain their character when allocated to the partners.
    To answer your question with respect a general partner with a profit interest in a partnership whose only income is IRC1256 income. The general partners share of allocable income will remain IRC1256 income.