PwC alternatives alert, July 20, 2010

New York Governor Paterson offers revised budget proposal minus carried interest

New York Governor David A. Paterson submitted a revised Revenue Budget proposal to the state’s legislature. The revised measure does not include the proposed change to the tax treatment of carried interest (to ordinary income from the current long-term capital gains rate) for non-resident New York employees that was included in the Governor’s previously submitted Budget proposal (a similar measure was included in the Budget proposal put forward by leadership of the state Senate and Assembly). The New York State Assembly passed its version of a budget containing the carried interest provision on Thursday, July 1, but the Senate adjourned on Friday, July 2 without voting on the measure. Barring an unexpected agreement, we anticipate tri-party negotiations between the Governor’s office and New York State Senate and Assembly leaders to continue into this week, but remain mindful of the ability of the Senate to commence consideration of a Budget proposal that may include, or exclude, the carried interest proposal at any moment.

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