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Date: Wednesday, December 27 2017 05:02 PM Subject: (BN) Leon Black’s Tax- Overhaul Dilemma Could Alter Wall Street M From: Glenn Dubin (DUBIN & COMPANY LP) ii > To: undisclosed-recipients:; BCC: jeevacation@gmail.com; (BN) Leon Black’s Tax-Overhaul Dilemma Could Alter Wall Street M odel panne nn nnn nn nn nnn nn nn nnn nn nn nnn nn nn nnn nn ne nnn ne nn nnn nn nnn ne nnn nee Leon Black’s Tax-Overhaul Dilemma Could Alter Wall Street Model 2017-12-27 11:00:00.2 GMT By Simone Foxman and David Carey (Bloomberg) -- Leon Black recently posed a question whose answer will determine how profitable the new U.S. tax regime could make Wall Street firms like his Apollo Global Management LLC. Publicly traded partnerships, such as Apollo, are taxed differently than corporations. So should Apollo take advantage of the overhauled tax rules to pay less in taxes? Or should it use this chance to change to an Inc. from an LLC, which would increase its tax bill but allow it to attract investments from mutual funds that have previously been out of reach? “We're still analyzing,” Black told the Goldman Sachs U.S. Financial Services Conference Dec. 6. “It’s an uncertain outcome.” Either way, it’s most likely a money-making outcome. The tax changes are a boon for private equity firms such as Apollo, where Black is chief executive officer. The new lower corporate rate has made it possible for bigger publicly traded partnerships to consider the change. As it is, management fees, which typically account for 30 percent or more of their earnings, are already taxed at the corporate rate. That will drop. The legislation scarcely touched the 23.8 percent rate paid on incentive fees, also called carried interest, which incur no additional levy when paid out to shareholders. Double Tax If the partnerships converted to corporations, the incentive fees would be hit with a second layer of tax when they’re paid out. That would push the combined tax rate on incentive income paid out as dividends to nearly 40 percent, according to Peter Furci, co-chair of Debevoise & Plimpton’s global tax practice. But it would also allow the newly minted corporations access to indexes, and therefore the mutual-fund and ETF markets. About $2.2 trillion follows the S&P 500 Index, according to its website. As of June, $122.6 billion in assets tracked the Russell 2000 Index, the best-known small-cap U.S. HOUSE_OVERSIGHT_023564