I was rather skeptical of this due to the absence of specific detail on what was going to be taxed and how.<p>It seems reform proposals include the idea of taxing a <i>fund manager's</i> share of a fund's annual profits, known as 'carried interest' - a performance bonus in addition to regular management fees, sometimes as high as 20% - as ordinary income. Currently it is booked as capital gains, although the fund manager may not have invested any capital. You can find out if a fund manager is invested in their own fund by reading the 'Statement of Additional Information' (SAI) on their website/prospectus.<p><i>Investors</i> in a VC fund would continue to be taxed under capital gains provisions, as they are now. Also, a fund manager's own capital investment in a fund would be continue to be taxed as capital gains; only the amount paid as a performance bonus for success in managing <i>other</i> people's money would be taxed as income. Losses would continue to be offsettable for tax purposes as they are at present, it seems.<p><a href="http://www.businessweek.com/news/2010-05-13/senators-seek-venture-capitalist-waiver-from-fund-tax-update1-.html" rel="nofollow">http://www.businessweek.com/news/2010-05-13/senators-seek-ve...</a> has some additional information, and <a href="http://webcache.googleusercontent.com/search?q=cache:WBne-r3bULsJ:www.icsc.org/government/toolkits/CI%2520Bill%2520Language.doc+%22carried+interest%22+thomas.loc.gov&cd=3&hl=en&ct=clnk&gl=us" rel="nofollow">http://webcache.googleusercontent.com/search?q=cache:WBne-r3...</a> reprints the relevant language in the house bill.