June 20, 2007
Pricing Blackstone's Tax Risk
Posted by Victor Fleischer

It's a taxation of carried interest fiesta at the WSJ today:

Editorial, The Blackstone Tax (calling Congress a bunch of communists)
Alan Murray, The Real Answer on the Blackstone Tax Rate (mentioning my cost-of-capital analysis)
Sarah Lueck & Brody Mullins, Rangel May Back Higher Levies on Buyout Firms (noting consideration of the Baucus-Grassley bill may happen as soon as July)
Peter Lattman, Academic Gets His Close-Up In Private Equity Tax Fracas (profiling me)
Peter Lattman, Law Blog (same)
Yvonne Ball, Blackstone IPO Expected to Make its Trading Debut on NYSE Friday (deal will be priced tomorrow night)

Curious how the tax issue will affect the pricing of the Blackstone IPO, which will be priced tomorrow.  Blackstone would get five years transition relief from the corporate tax under the Baucus-Grassley bill, which would dampen the effect of the change, plus it's hardly a sure thing that the bill will pass.  On the other hand, I've been hearing rumors that the Finance Committee is indeed considering a bigger bill on the taxation of carried interest (not just the PTP issue), which would moot the transition relief issue if passed.  But I should emphasize that I've heard this from reporters who are hearing this from lobbyists (not Senate aides) so who knows.  Across the pond, there's even more momentum for increasing the tax rate on carry. 

Related Posts:

Oaktree Capital: The Other PE PTP?
The Blackstone Amendment to the PTP Rules

The Blackstone IPO: Two and Twenty on Drugs

AFL-CIO vs. Blackstone
Reuters and Bloomberg on Blackstone's Tax Structure
The Politics of Taxing Blackstone
Blackstone IPO: Analysis of the Tax Risk 
The Blackstone IPO: Regulatory Arbitrage Extraordinaire

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