The "Ending the Carried Interest Loophole Act" aims to significantly alter the tax treatment of partnership interests received in exchange for services, commonly known as carried interest. It introduces two main changes to the Internal Revenue Code, affecting how service partners are taxed on their equity stakes and subsequent gains. Firstly, the bill amends Section 83, which governs property transferred in connection with services. For partnership interests, it generally mandates that the fair market value be included in the recipient's gross income at the time of transfer, unless the recipient elects otherwise. This fair market value is determined by a hypothetical liquidation of the partnership's assets, aiming to tax the initial value of the "promote" or upside potential. The amount included in income is then treated as an addition to the partner's capital account. Secondly, the legislation establishes a new Section 1299, which directly targets "applicable partnership interests" (APIs). An API is broadly defined as an interest transferred for services in an "applicable trade or business," encompassing activities involving raising capital and investing in or developing "specified assets" like securities, real estate, and commodities. Under this new provision, taxpayers holding APIs must annually include a "deemed compensation amount" in their gross income as ordinary income, while simultaneously recognizing a long-term capital loss of the same amount. The "deemed compensation amount" is calculated using a high "specified rate" (a base rate plus nine percentage points) applied to a portion of the partnership's invested capital, adjusted for the specific API. This mechanism is designed to ensure that a significant portion of the returns from carried interest is taxed at ordinary income rates, rather than the lower capital gains rates. The bill also includes provisions to prevent avoidance, such as treating certain financial instruments and loans as APIs, and accelerating income inclusion upon disposition of an API within a 10-year period. It repeals the existing, less comprehensive, Section 1061, and these changes are intended to apply to partnership interests transferred and to taxpayer taxable years beginning after the Act's enactment.