Mnuchin told the Senate Finance Committee that a Bloomberg News story Wednesday, which detailed how hedge funds created scores of shell companies to work around the new carried-profit rules, prompted him to instruct administration officials to issue guidance on the subject within two weeks. 

“I’ve already met with the IRS and our Office of Tax Policy this morning as a result of that article,” Mnuchin told the committee. “Taxpayers will not be able to get that loophole.”

The new guidance would effectively kill hedge fund managers’ plans to create numerous shell companies in Delaware -- corporate America’s favorite tax jurisdiction -- to get around the tax law’s requirement that assets must beheld for three years instead of one year to qualify for a lower tax rate.

Carried interest is the portion of an investment fund’s returns that are paid to hedge fund and private equity managers, venture capitalists and certain real estate investors. For federal tax purposes, it’s eligible for a tax rate of 23.8 percent -- which includes a 3.8 percent tax on investment income imposed by the Affordable Care Act -- on sales of assets held for at least three years. Otherwise, it’s treated as ordinary income and managers face a top federal income tax rate of 37 percent. […]