Hedge fund managers need to be constantly aware of new tax regulations or changes in the tax code that could affect the investments they make, the taxes they pay and any flow-through issues that could impact investors.  Under the Economic Growth and Family Fairness Tax Reform Plan (commonly known as the Rubio-Lee plan), taxation of capital income would cease; corporate tax would be based on income earned in the U.S. and interest would no longer be expensed; capital investments would be expensed with no depreciation schedules; and most itemized deductions would end.  The 2016 federal budget proposal would increase the capital gains and qualified dividend rate to 28%; the tax on accrued market discounts would be assessed as it accrues; and carried interest would be taxed as ordinary income.  Under California State law, Sales Sourcing rules may have an impact on the taxation of hedge fund investments from out-of-state managers.  Finally, peer-to-peer lending platforms raise questions regarding proper tax characterization.  During a roundtable discussion on March 24, 2015, Pepper Hamilton LLC partners Gregory Nowak and Steven Bortnick discussed the foregoing issues.  This article summarizes the key points raised during that roundtable.  For a discussion of other proposed tax regulations, see “Tax Practitioners Discuss Taxation of Options and Swaps and Impact of Proposed IRS Regulations,” Hedge Fund Law Report, Vol. 8, No. 7 (Feb. 19, 2015).  See also “Key Tax Issues Facing Offshore Hedge Funds: FDAPI, ECI, FIRPTA, the Portfolio Interest Exemption and ‘Season and Sell’ Techniques,” Hedge Fund Law Report, Vol. 8, No. 3 (Jan. 22, 2015).