The tax imposed by RSA 78-B shall not apply to changes in an owner’s carried interests in a real estate holding company or in an entity owning an interest in a real estate holding company. For purposes of this section, “carried interests” means a right that enables the owner of a partnership or limited liability company to share in the entity’s profits, as in the following example:

Apartment Building is owned by Partnership, with Partner A, Partner B, and Managing Partner C as equal partners. Apartment Building has a fair market value of $900,000. The Partnership agreement provides that Partner A, Partner B, and Managing Partner C will share equally in profits and losses, except that Managing Partner C will be entitled to share in 50% of all profits, once Partner A and Partner B have recovered their initial investments. If Managing Partner C sells the ownership interest to New Managing Partner D there shall be a taxable sale, granting, or transfer between Managing Partner C and New Managing Partner D under RSA 78-B. Pursuant to Rev 805.01(b), the amount of consideration for the sale shall be $300,000 regardless of whether Partner A or Partner B has recovered their initial investments. There shall not be a taxable sale, granting, or transfer with respect to Partner A or Partner B.

Source. #10665, eff 9-9-14; ss by #10882, eff 7-11-15; ss by 14071, eff 9-10-24