The impact of tax reform on private equity funds and portfolio companies
January 30, 2018
By Nick Gruidl, Jerry Musi, and Michael Nader: Partners, Tax, RSM US LLP
The Tax Cuts and Jobs Act (TCJA) is the most significant overhaul of US tax policy since 1986. With most of the provisions already in effect as of January 1, it's crucial that private equity managers and professionals understand the key provisions that may affect their private equity funds and portfolio companies.
Some of the key tax provisions impacting private equity include:
Reduction of corporate tax rate
Repeal of corporate alternative minimum tax
Net operating loss deduction
Territorial tax system
Interest deduction limitations
When all of the TCJA provisions roll out, we are likely to see the trend of asset-based (over stock) deals continue, while the pass-through vs. corporate decision is less clear. Regardless of the outcome, deal teams will have many additional tax attribute facets to consider when acquiring or exiting an investment.
Read on to learn more about relevant provisions of the TCJA and how they might impact private equity.
This article represents the authors' views only and doesn't necessarily represent the views of PitchBook.