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On January 13, 2021, the Internal Revenue Service (“ IRS”) and the U.S. Treasury Department (“ Treasury”) issued the official version of Final Treasury Regulations (the “ Final Regulations”) providing guidance under the “carried interest” rules of Section 1061 of the Internal Revenue Code of 1986, as amended (the “ Code”). 1 The Final Regulations address a number of previously open questions regarding the scope and implementation of Section 1061 which was enacted as a part of the 2017 Tax Cuts and Jobs Act. The Final Regulations in large part adopt the Proposed Treasury Regulations previously issued on July 31, 2020 which provided preliminary guidance under such “carried interest” rules (the “ Proposed Regulations”). The Proposed Regulations are discussed here. The Final Regulations do, however, contain a few substantive changes to the Proposed Regulations. Taxpayers involved in enterprises that issue carried interests (e.g., private equity funds,

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