Private equity investor? Higher taxes may be looming.

Private equity investor? Higher taxes may be looming.

Private equity funds are engaged in a trade or business under the Employee Retirement Income Security Act (ERISA), a court ruled this week. Now may be a good time for private equity funds, their managers, investors, and advisers to reexamine their tax position.

The First Circuit U.S. Court of Appeals ruled Wednesday that private equity funds are engaged in a trade or business under the Employee Retirement Income Security Act (ERISA).  The court said the case, Sun Capital Partners v. New England Teamsters & Trucking, “presented important issues of first impression.”   And the court’s resolution of the trade or business issue now may open the door to much higher taxes for private equity funds and their investors.

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