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Tax Law Roundup current law developments in U.S. taxation

Category Archives: Funds

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IRS Curtails Profits Interests In Lieu of Management Fees and More

Posted in Capital Gain, Compensation, Funds, Partnership/LLC

The IRS issued the much anticipated proposed regulations that severely curtail the practice of a fund manager waiving management fees in exchange for a share of future partnership profits. In essence the regulations tighten the necessary “entrepreneurial risk” required of the future profits interest plus list five other negative factors for recasting the profits interest… Continue Reading

Private Equity Fights Back – Taxpayer Appeals Sun Capital Decision Attributing Partner’s Business to Fund

Posted in Funds, Partnership/LLC, Passthrough Entity

Two weeks after the First Circuit struck a blow to the private equity industry in Sun Capital Partners, investment funds affiliated with Sun Capital have filed a petition for a rehearing.  The petition, which was filed August 7, 2013, argues that the First Circuit’s decision in Sun Capital is contrary to prior First Circuit decisions. … Continue Reading

Treasury Delays FATCA Implementation by Six Months

Posted in Compliance, Funds, International

The Treasury issued a Notice to give taxpayers six more months to comply with the complex FATCA requirements needed to avoid 30% withholding on certain payments to a Foreign Financial Institution (FFI) and certain Non-Financial Foreign Entities (NFFE).  The recently finalized FATCA regulations have phased-in implementation from January 1, 2014 through 2017.  Under the new… Continue Reading

Tax Court Finds Ordinary Bad Debt Loss on Loan Related to Venture Capital Business

Posted in Deductions, Funds, General

The Tax Court held that a Venture Capitalist was entitled to an ordinary loss on a failed loan to a business associate, finding that the loan was related to the lender’s VC business. The Venture Capitalist made the loans to an individual who agreed to provide business leads. The court concluded that business nexus required… Continue Reading