Investopedia

Profits Interest

Dictionary Says

Definition of 'Profits Interest'

A monetary right awarded to the general partner, investment manager or a service provider of a partnership. The award consists of receiving a percentage of profits from a partnership without having to contribute capital to the partnership. Profits interests are often criticized as recipients can generate large profits for themselves while not incurring sufficient risk.
Investopedia Says

Investopedia explains 'Profits Interest'

This method serves as an incentive for partners to become more proactive in pursuing bigger and better profits thus contributing towards the companies' growth. This situation presents a tax benefit in that beneficiaries of this instrument can be taxed under long-term capital gains versus the higher federal tax rate.

Articles Of Interest

  1. 6 Employment Perks And How To Get Them

    Find out how to get more than money from your employer.
  2. A Guide To CEO Compensation

    Make sure you assess whether a CEO has a stake in doing a good job for you, the shareholder.
  3. How To Owe Nothing On Your Federal Tax Return

    You have the control to determine whether you owe in April. Learn more here.
  4. An Investor's Checklist To Financial Footnotes

    Footnotes to the financial statements contain very important information, but reading them takes skill.
  5. A Close-Up On Gross Ups

    Learn about this hidden perk and why it's often bad news for investors.
  6. Quants: The Rocket Scientists Of Wall Street

    Blend math, finance and computer skills to command a high - and well deserved - salary.
  7. Financial Career Options For Professionals

    Find out if spreading your wings to try a new career will make you soar or fall flat.
  8. 7 Unconventional Ways Businesses Can Borrow Money

    Find out how your business can get the money it needs - even when the bank says "no".
  9. A Look At CFA Job Opportunities

    Being a CFA charterholder can take your career in many different directions. Find out what your option are.
  10. Invest Like A Pro

    By following the strategies of the pros, even a beginner can learn to invest like an expert.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.
  2. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
  3. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
  4. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.
  5. Consequential Loss

    The amount of loss incurred as a result of being unable to use business property or equipment.
  6. Lease To Own

    An arrangement where an individual enters into a lease agreement with an owner with the inclusion of a clause that typically gives the individual the right, but not the obligation, to purchase the item leased at a predefined price and time.
Trading Center