Mixing Management Fee Waivers with Mayo

53 Pages Posted: 1 Oct 2013 Last revised: 16 Jul 2015

Andy Grewal

University of Iowa - College of Law

Date Written: October 1, 2013

Abstract

This Article examines whether the management fee waiver strategy used by private equity firms to drop their tax rates actually works. Scholars have almost uniformly condemned the strategy, calling it "extremely aggressive," "profoundly piggish," or otherwise "illegal." However, this Article shows that the critics substantially overstate their case. The provision of law most frequently cited by the critics doesn't even exist, and their arguments seem particularly inapposite, given the changes in the tax-administrative law landscape wrought by Mayo v. United States.

Keywords: private equity, 707, Mayo, fee waivers, profits interests, phantom regulations, guaranteed payments, Pratt, Bain

Suggested Citation

Grewal, Andy, Mixing Management Fee Waivers with Mayo (October 1, 2013). 16 Fla. Tax. Rev. 1; U Iowa Legal Studies Research Paper No. 13-37. Available at SSRN: https://ssrn.com/abstract=2333213

Amandeep S. Grewal (Contact Author)

University of Iowa - College of Law ( email )

Melrose and Byington
Iowa City, IA 52242
United States

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