The Real Estate Seminar Series will sponsor a seminar by Christian Hilber, London School of Economics. Contact Brent Ambrose for more information.

Seminar with Michael Knoll Michael Knoll will present a seminar on Thursday, May 20 at 2:30 in room 214. Professor Knoll is the Theodore K. Warner Professor of Law at the University of Pennsylvania Law School and Professor of Real Estate at the Wharton School. He will be discussing his research on the taxation of carried interests at a gathering jointly sponsored by Smeal's Insurance and Real Estate Department and the Dickinson School of Law. The abstract is below. Please contact Dan Cahoy (DanCahoy@psu.edu) with any questions. The Tax Advantage of "Sweat Equity": What it is and its Relationship to the Carried Interest Controversy Michael S. Knoll University of Pennsylvania A central feature in the ongoing controversy over the tax treatment of carried interests is the tax treatment of "sweat equity". Both reformers, who want to raise the tax levied on carried interests, and defenders of the status quo use analogies and comparisons to bolster their arguments. Reformers argue that carried interests are improperly being taxed more favorably than are paid services. They argue that private equity fund managers, who pay tax upon realization at long-term capital gains rates, are taxed less heavily than people who are paid salaries and invest their after-tax salaries in equities. In response, defenders of the status quo argue that carried interests should be taxed no less favorably than "sweat equity" – services provided by an owner of a business that are not compensated by current salary – which they assert is taxed as favorably as private equity currently is, but which they claim would be taxed more favorably than private equity if any of the various tax reform proposals were adopted. Thus, "sweat equity" is at the center of the controversy over the tax treatment of carried interests. Yet, in spite of the numerous claims being made about the tax advantage of "sweat equity," both on its own and relative to other forms of compensation, no one has spelled out carefully and specifically what is the tax advantage from "sweat equity." This essay identifies the source of the tax advantage from using "sweat equity." It, then, relates that advantage to the carried interest controversy.

The LEMA/Elliott Seminar Series is sponsoring a seminar by Timothy Cason of Purdue. Contact Tony Kwasnica for more information.