Monte A. Jackel, Lecturer/Of Counsel to Leo Berwick, LP, was quoted in a Tax Notes article regarding the language deleted from the corporate minimum tax proposal.
Date: August 11, 2022
By Kristen A. Parillo
Partnership Rules Likely at Root of Corporate Minimum Tax Fight
The disputed language was likely added by Democrats to address the industry’s position that private equity firms shouldn’t be counted in the testing for aggregating commonly owned corporate subsidiaries because — in the industry’s view — they aren’t in the trade or business of owning portfolio companies, Jackel, who is also an adjunct professor at Catholic University Law School, told Tax Notes.
Jackel pointed out that even if the ultimate parent company of the private equity business is a corporation for federal tax purposes, there will be partnership funds below the corporation that own portfolio corporate companies. “So the partnership issue would have been present there as well,” he said.
The industry bases its position on the argument that the parent partnership must be engaged in a trade or business for the section 52(b) aggregation rules to apply, Jackel said. “Without a parent that is in a trade or business, there is no commonly controlled group under section 52,” he added.”