To embed, copy and paste the code into your website or blog: On January 7, 2021, the U.S. Treasury Department and the Internal Revenue Service released final regulations under Section 1061 of the Internal Revenue Code of 1986, as amended (“the Code”). [1] The Final Regulations address the three-year holding period requirement under Section 1061 in order for holders of certain “carried interests” to qualify for preferential capital gains tax rates. The extended holding period requirement was added to the Code in 2017 by H.R. 1, commonly referred to as the “Tax Cuts and Jobs Act.” The Final Regulations generally adopt the same approach taken by the proposed Treasury Regulations that were released on July 31, 2020 (the “Proposed Regulations”), but make certain significant helpful and taxpayer-favorable modifications to the Proposed Regulations, although some questions and difficulties still remain. Please refer to Goodwin’s previous memorandum regarding the Proposed Regulations.