Revisiting State Sourcing Rules for Sales of Partnership Interests

According to a December 2025 Private Equity International article,1 many private equity firms are

experiencing a slowdown in fundraising activity. That recent industry trend has prompted some general partners to sell significant amounts of their equity interests. In a typical private equity partnership structure, general partners — often organized as limited liability companies — contribute minimal capital primarily to demonstrate their commitment to the performance of the funds they manage. In general, those LLCs are treated as partnerships for federal and state tax purposes, and individual partners generally own those general partner entities.