Good point, but I believe the majority of US-operated HFs are structured in offshore havens (specifically the Caymans). Even though the managers and their offices are onshore, the deferment benefit of the carried interest is possible as a result of legally registering in an offshore territory.
Actually, it's the abolition of deferment which is part of how they are justifying taxing at the full rate: http://www.crowell.com/NewsEvents/Newsletter.aspx?id=1042 http://www.pillsburylaw.com/content...843/Exec Comp Vol 1100 No 1146 10-21-08_1.pdf
Yes, I see existing funds will be grandfathered if in existence before Jan 1, 2009. So, shouldn't apply to existing firms. I've linked to two respected law firms interpretations of the bill. I suppose you're free to make your own judgements.
I'm not seeing that. I see grandfathering for "services provided prior to January 1, 2009", which would make sense. Grandfathering 'existing funds' would make this provision utterly toothless. I am interested in learning exactly what "protection for deferral arrangements currently in place" means. This language certainly suggests the existence of a loophole.
From everything I'm reading, it means what you said: any services already performed and currently being deferred will continue being deferred up to 2017. Any services provided after 2008 will no longer be elligible for deferral.