Common use of Carried Interest Clause in Contracts

Carried Interest. The Carried Interest is the share of the Funds profits allocated to the General Partner (§ 3.1). On the last day of the Fiscal Year (§ 1.8), the General Partner collects Management Fees (§ 3.11) and Performance Allocation (§ 3.12) in a form of transferring the ownership of the Fund to the General Partner. If the General Partner sells any of the ownership, it is taxed as ordinary income (§ 7.7) if held for less than a year but taxed as long-term capital gains if held over a year. All profits made from Carried Interest are considered short term capital gains and are taxed as ordinary income.