The Sun Capital Decision: Much Ado About Nothing For Private Equity Funds?

Guest post by Jonathan Talansky of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

The First Circuit’s much-discussed decision in Sun Capital Partners III, LP, et al. v. New England Teamsters & Trucking Industry Pension Fund et al., No. 12-2312 (1st Cir. 2013) has forced many practitioners and commentators (and, perhaps, tax policymakers) to take another step back and assess the appropriate tax treatment of pooled investment vehicles (in particular, private equity funds). The ultimate holding of the case, however, is far less foreboding for tax purposes than some have made it out to be. In fact, the most relevant aspect of the case from a federal tax perspective may just be a footnote buried near the end of the court’s opinion.

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