Private equity executives won a major concession in a battlewith the Obama administration over plans to raise taxes whenselling stakes in their firms, potentially saving billionaires suchas Stephen Schwarzman and David Rubenstein hundreds of millions ofdollars.

President Barack Obama and Representative Sander Levinseparately signaled this month that proposals to raise taxes oninvestment performance fees, known as carried interest, won't applyto profits earned when buyout fund founders and other executivessell some or all of their holdings in their firms. The presidentand Levin, a Michigan Democrat and the party's top member on theHouse Ways and Means Committee, previously backed legislation thatwould have increased rates for carried interest as well as for theso-called enterprise value.

For founders of private equity firms, hundreds of millions ofdollars are riding on how enterprise value is taxed. The biggestfirms have leaders who are aging and are seeking to sell throughinitial public offerings or secondary sales. Others have privatelysold stakes to investors such as public pension funds.