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Hedge Fund Investment Gains Should be Taxed as Ordinary Income According to Latest ABI Poll

Contact: John Hartgen
             [email protected]




November 21, 2007, Alexandria, Va. —A majority of respondents (71 percent) to ABI’s latest online poll agreed that investment gains of hedge funds should receive the same tax treatment as ordinary income for the performance of services, rather than the lower capital gains rate they currently receive. Fifty-six percent of respondents “strongly agreed” and 15 percent “somewhat agreed” that hedge fund investment gains should be taxed as ordinary income rather than the lower capital gains rate under current law.

Twenty-one percent of respondents, however, indicated that hedge funds should continue to be taxed at the lower capital gains rate rather than as ordinary income for the performance of services.  Fifteen percent “strongly disagreed” and 6 percent “somewhat disagreed” that hedge funds should be taxed as ordinary income. Five percent of the respondents did not know or had no opinion on the issue.

The House of Representatives recently passed H.R. 3996, the “Temporary Tax Relief Act of 2007,” that would change the current tax code to treat the taxation of hedge fund investment gains as ordinary income, rather than the current lower capital gains rate. The bill, sponsored by House Ways and Means Chairman Charles Rangel (D-N.Y.) passed the House on Nov. 9, after a number of congressional hearings and proposed bills earlier this year highlighted the lower taxation rates on the lucrative gains of private equity.

ABI members and members of the public were welcome to submit their response to the statement: “In terms of the tax treatment of hedge funds, investment gains should be treated as ordinary income for the performance of services, rather than (currently) at the lower capital gains rate.”

ABI’s Quick Poll is posted on ABI’s home page, ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit to access the results of previous ABI Quick Polls.


ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit For additional conference information, visit