Americans have a long history of structuring their finances in order to minimize their tax obligation. One of my favorite legal quotes is from Supreme Court Justice Learned Hand, who said: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).
Management fee waivers are a tax-minimization strategy employed by private equity firms to essentially have management fee taxed at capital gains rates rather than at ordinary income rates. There's a recent article from NY Times DealBook called "What's at Issue in the Private Equity Tax Inquiry" that provides a good overview of management fee waivers and why the New York Attorney General is reportedly investigating the practice.
Here's the link:
http://dealbook.nytimes.com/2012/09/04/whats-at-issue-in-the-private-equity-tax-inquiry/
Management fee waivers are a tax-minimization strategy employed by private equity firms to essentially have management fee taxed at capital gains rates rather than at ordinary income rates. There's a recent article from NY Times DealBook called "What's at Issue in the Private Equity Tax Inquiry" that provides a good overview of management fee waivers and why the New York Attorney General is reportedly investigating the practice.
Here's the link:
http://dealbook.nytimes.com/2012/09/04/whats-at-issue-in-the-private-equity-tax-inquiry/
