Tax Rate is 66%!!!!!!

Hey all,

I recently was shown a partner distribution sheet. Along with future expected distributions there are 2 sections... “estimated tax distributions to date” and “estimated after tax distributions to date.”

I won’t include the number of 0s but tax distributions was a 9 and after tax distributions was a 6.... does that mean 9 went entirely to taxes?! That would be like 66%... could it be that 6 is Tax exempt, and then the 9 can be taxed at 50% or whatever... it would be insane if the tax rate was really 66%. Thanks for the help in advance

 
Most Helpful

Are you in the US? There is no tax rate anywhere near 66% in the US. So no, you must have read it incorrectly.

I can imagine “taxable distribution” and “distributions after tax”, which would imply a 33% rate which still seems high (depending on carried interest or ordinary income - I believe this would normally be carried interest).

Keep in mind that carried interest is taxed at capital gains rate. This is one complaint many people have and one of the tax advantages of PE and HF vehicles (to the partners).

 

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