In advance of tomorrow's Senate Finance Committee hearing on the carried interest tax loophole, the Joint Committee on Taxation issued a report today, Present Law and Analysis Relating to Tax Treatment of Partnership Carried Interests. At the nub of the report is this "core question": ...whether a carried interest received by an asset management business should be viewed as a form of compensation for services, or whether it is more similar to an interest in capital. The Federal income tax treatment of partnership profits interests for services (of which carried interests can be an example) has evolved through litigation and Internal Revenue Service positions. Carried interests and similar arrangements may also raise issues relating to the application of tax rules governing compensation, such as the rules governing the receipt of property for services and deferred compensation (which affect both the timing and the character of income). The panelists scheduled to testify at tomorrow's hearing are as follows:

• Eric Solomon - assistant secretary of the Treasury for tax policy
• Peter R. Orszag - director, Congressional Budget Office
• Andrew Donohue - director, Division of Investment Management, Securities and Exchange Commission
• Kate D. Mitchell - managing director, Scale Venture Partners, Foster City, Calif.
• Marc P. Gergen - professor, University of Texas School of Law, Austin, Texas