US Tax law changes complicate secondary transfers of partnership interestsp

Recently enacted tax legislation has the potential for creating a tremendous administrative burden for U.S. private fund partnerships, says Weil, Gotshal & Manges. Although an exemption intended for private funds is available for funds that elect to be treated as "electing investment partnerships," a number of requirements must be met, and making the election will have a direct effect on the ability of purchasers of secondary interests to deduct their share of partnership losses. Moreover, there are a number of open issues relating to how the new rules will be interpreted.