HOUSE OVERSIGHT 026779 partners whose names and contact information can be found at the end of the Alert. The Tax Cuts and Jobs Act (the "Tax Act"), which was signed into law by President Trump on December 22, 2017, contains the most sweeping federal tax law changes since 1986. Most provisions of the Tax Act take effect for taxable years beginning on or after January 1, 2018. This Client Alert is not intended to be a comprehensive review of this massive legislation. The Alert focuses on certain provisions of the Tax Act that may have the most significant impact on asset management firms, their owners, their investment vehicles, and the investors in such funds. Certain changes made by the Tax Act are permanent but many others are scheduled to expire after 2025 unless extended by further Congressional legislation. I. Carried Interest Survives in Modified Form The Tax Act contains changes to the treatment of "carried interests", but such changes are not as negative as the prior legislative changes that had been proposed but never adopted. The granting of a "future profits only" interest in a partnership in connection with the performances of services to the partnership continues to be eligible for tax-free treatment under the new law. For certain owners of "Applicable Partnership Interests" (of the sort that would generally be issued by an investment partnership to the general partner), the Act applies a three-year holding period requirement for capital gains derived by the partnership (or from the disposition of the profits interest) to be eligible for the long-term capital gains tax rate (instead of the generally applicable one-year holding threshold). The change in carried interest taxation clearly impacts managers of hedge funds more than managers of private equity funds or real estate funds, which typically have a longer than three-year holding period for investments in their portfolio companies or real estate assets. The new tax treatment a