Key takeaways

• Last week, the Treasury and the IRS issued proposed regulations relating to disguised payments for services rendered by a partner to a partnership. 
• The proposed regulations focus primarily on whether the payment to the service provider lacks “significant entrepreneurial risk.”
• Although expected to target management fee “waiver” mechanisms, the proposed regulations are much broader and implicate other partnership arrangements, including the profits interest safe harbor of Revenue Procedure 93-27.  They do not appear to modify the tax treatment of carried interest.