To recap the issue briefly, Carried Interest is the percentageof a fund's, joint venture's or limited partnership's profits thata general partner takes as compensation. Such profits are taxed atcapital gains rates--15%--as opposed to ordinary income, which canbe as much as 35%.

Carried Interest caught the attention of Congress last yearafter Blackstone co-founder Stephen A. Schwarzman received $600million in Carried Interest when the firm went public. Bills wereintroduced to treat income received by partners for performinginvestment management services as ordinary income, that is, for itto be taxed at 35% instead of 15%. Such a change would affectprivate equity and financial firms as well as real estatedevelopment partnerships.

One of Barack Obama's proposals is to tax Carried Interest asordinary income. McCain, by contrast, would continue the currentpolicy of taxing it at capital gains levels, or 15%, according tothe NAIOP National, which has compared the two presidentialcandidates' tax positions on many issues, such as the AlternativeMinimum Tax--McCain wants to phase it out; Obama wants to extendthe patch--and the corporate income tax--McCain wants to reduce itto 25% from 35%; Obama wants to maintain it at its current level of35%.