I spoke to Bloomberg BNA‘s Allyson Versprille about the pass-through state of play:
The pass-through approach in the final tax legislation is likely to be closer to the Senate’s version, according to Liam Donovan, a tax lobbyist at Bracewell LLP in Washington.
“Their package has cleared the all-important procedural traps under the Byrd Rule,” Donovan said. The Byrd Rule is a condition of the budget reconciliation process that prohibits legislation that increases the deficit outside the 10-year budget window.
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The Senate bill would allow publicly traded partnerships (PTPs) to take advantage of the 23 percent deduction. The benefit wouldn’t extend to private equity firms classified as PTPs, such as Blackstone Group LP and Carlyle Group LP, but oil and gas firms classified as master limited partnerships (MLPs) would be able to take advantage of the deduction.
This change puts MLPs on a level playing field with similar entities, such as real estate investment trusts, Donovan said.
“Most MLPs are structured in a way that would have prevented them from taking advantage of the pass-through deduction created in the Senate bill,” he said.
The Senate bill would limit the deduction based on the amount of wages paid. MLPs, which pay their investors and their employees from separate entities, wouldn’t be able to avail themselves of the deduction without this provision in the legislation.
Read the full piece here.