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tax-exempt investors

Tax-Exemption

11 Apr 2024

Structuring for Tax-Exempt Investors

Tax implications often determine how certain types of investors will invest in a fund.  There are various categories of investors that have competing tax implications so it is important that the fund can accommodate the competing tax interests of the investors.  One category of investors are tax-exempt investors and planning for unrelated business income tax (“UBIT”). 

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avoid double taxation, FATCA compliance for U.S. citizens, tax filing, tax for U.S. citizens and U.S. tax residents, Taxation of Foreign Assets

28 Mar 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Taxation and Reporting of Certain Foreign Assets

U.S. citizens and U.S. tax residents (“U.S. Persons”) who reside outside the U.S may have investments or assets that require special reporting or have alternative tax regimes. It is important the U.S. Person or their tax advisor understands these specialized tax rules in order to avoid punitive tax regimes or penalties to properly file the required informational reports.

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avoid double taxation, FATCA compliance for U.S. citizens, tax filing, tax for U.S. citizens and U.S. tax residents

14 Mar 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Foreign Bank Accounts

The government does not annually tax wealth.  However, the IRS wants to know about funds U.S. Persons have in foreign bank accounts.  There are now two different reporting requirements for foreign bank accounts, the Foreign Bank Account Report (“FBAR”) and the individual reporting requirement under the Foreign Account Tax Compliance Act (“FATCA”).

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avoid double taxation, tax filing, tax for U.S. citizens and U.S. tax residents

29 Feb 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Mitigation of Double Taxation

There are two methods that a U.S. Person living abroad can use to reduce their U.S. tax liability.  The two methods are the Foreign Earned Income Exclusion (“FEIE”) and the Foreign Tax Credit (“FTC”).  Even if one of these methods were to eliminate the U.S. Person’s U.S. tax liability, the U.S. Person is still required to file their U.S. tax return if their income exceeds the filing thresholds for the tax year. 

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tax filing, tax for U.S. citizens and U.S. tax residents

15 Feb 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas

U.S. citizens and U.S. tax residents (“U.S. Persons”) are taxed in the United States on their worldwide income no matter where in the world they reside. The U.S. taxes based on citizenship, which is different than almost all other countries in the world that tax based on residence. This often catches U.S. Persons who have never lived in the U.S. or have lived abroad for a number years by surprise. Any U.S. Person living abroad with income for tax year 2023 above the following thresholds must file a U.S. tax return:

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tax filing

1 Feb 2024

Tax Filings for the International Executive

Recently we were transitioning to take over the tax filing for an executive who was a U.S. tax resident because he had a green card but resided outside the U.S.  This executive has considerable income and the country that he resided in also taxed at higher rates than the U.S. federal income tax rates. Our review of the executive’s tax return not only found there were informational reporting errors, but that the income of the executive had been over reported by more than $160,000

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PFIC, PFIC Testing

18 May 2023

PFIC Testing for Foreign Portfolio Companies

Funds with U.S. investors, U.S. family offices, and individual U.S. investors (collectively, “U.S. Investors”) must be cognizant of whether their foreign investment in private companies is an investment in a passive foreign investment company (“PFIC”). Typically, a foreign portfolio company would be classified as a corporation for U.S. income tax purposes unless an election was made to have it taxed otherwise. The issue with PFICs is that unless certain elections are made, distributions from a PFIC may be subject to an excess distribution regime resulting in a punitive tax and interest charge. In certain bad circumstances, the punitive tax and interest charge can be the amount of the distribution.

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QOF, QOZ

11 May 2023

Importance of Semiannual and Annual OZ Testing

Fund managers must ensure their qualified opportunity funds (“QOF”) meet the requirement that 90 percent of the QOF’s assets are held in qualified opportunity zone (“QOZ”) property. Failure to meet the test can result in significant penalties to the QOF that can have a significant impact on the investment return to its investors.

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FATCA Compliance for Offshore Funds

4 May 2023

FATCA Compliance for Offshore Funds

It is important that fund managers understand their responsibilities under the Foreign Account Tax Compliance Act (“FATCA”). FATCA imposes a 30% withholding tax on U.S. source payments to foreign financial institutions (“FFI”) that do not comply with requirements to identify their U.S. account holders, as well as to non-financial foreign entities that do not identify their substantial U.S. owners, unless an exception applies. For offshore funds, understanding their FATCA reporting requirements is of the utmost importance to avoid withholding tax.

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PFIC, PFIC Testing

18 May 2023

PFIC Testing for Foreign Portfolio Companies

Funds with U.S. investors, U.S. family offices, and individual U.S. investors (collectively, “U.S. Investors”) must be cognizant of whether their foreign investment in private companies is an investment in a passive foreign investment company (“PFIC”). Typically, a foreign portfolio company would be classified as a corporation for U.S. income tax purposes unless an election was made to have it taxed otherwise. The issue with PFICs is that unless certain elections are made, distributions from a PFIC may be subject to an excess distribution regime resulting in a punitive tax and interest charge. In certain bad circumstances, the punitive tax and interest charge can be the amount of the distribution.

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QOF, QOZ

11 May 2023

Importance of Semiannual and Annual OZ Testing

Fund managers must ensure their qualified opportunity funds (“QOF”) meet the requirement that 90 percent of the QOF’s assets are held in qualified opportunity zone (“QOZ”) property. Failure to meet the test can result in significant penalties to the QOF that can have a significant impact on the investment return to its investors.

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FATCA Compliance for Offshore Funds

4 May 2023

FATCA Compliance for Offshore Funds

It is important that fund managers understand their responsibilities under the Foreign Account Tax Compliance Act (“FATCA”). FATCA imposes a 30% withholding tax on U.S. source payments to foreign financial institutions (“FFI”) that do not comply with requirements to identify their U.S. account holders, as well as to non-financial foreign entities that do not identify their substantial U.S. owners, unless an exception applies. For offshore funds, understanding their FATCA reporting requirements is of the utmost importance to avoid withholding tax.

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Global Mobility Immigration and Tax

Global Mobility, Immigration and Tax

6 Apr 2023

Streamlined Coordinated Services – Immigration and Tax

Transitioning key talent from one country to another presents complex issues for the multinational corporation. Global mobility requires coordination of services between in-house legal, human resources, and other divisions in multiple countries. The typical approach is to hire one of the large immigration firms and the big accounting firms to handle the immigration and tax work, believing this is the best way forward. We have seen too often under this model that the services are not customized and collaborative to the multinational corporation or the employee transitioning to work in a new country.

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Not Over Taxing Gains on Qualified Small Business Stock

QSBS

30 Mar 2023

Not Over Taxing Gains on QSBS (Qualified Small Business Stock)

The exclusion from gain applicable to the sale of qualified small business stock (“QSBS”) is a key benefit in selecting C corporation status for startups and other businesses. QSBS stock allows the noncorporate taxpayer to exclude from gain the greater of $10 million or ten times the taxpayer’s basis in the stock (“QSBS Eligible Exclusion Amount”). Properly excluding this gain from tax is an important tax savings opportunity and significantly increases the noncorporate taxpayer’s return on investment.

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23 Mar 2023

Power of the CRUT and Importance of Correct Tax Reporting to Receive the Desired Benefits

Family offices and private clients (“Clients”) have complicated investment and estate planning structures that require professionals to understand how to handle the needs from legal, accounting, and tax reporting. One of the planning tools frequently implemented for these Clients is a charitable remainder unitrust (“CRUT”). The CRUT allows for the tax-free liquidation of a highly appreciated asset, the tax-free growth of the assets inside the CRUT, with the income building inside the CRUT only being taxed to the extent of distributions to the lifetime beneficiary. This is a powerful tool if the tax reporting occurs correctly. We have noticed a gap between the estate planning and the tax reporting often resulting in phantom income being taxed to the detriment of the beneficiaries.

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Business Tax Planning, ROI, tax planning

16 Jan 2026

U.S. FATCA Model 2 Reporting Obligations for New Fund Managers

For fund managers operating under Model 2 IGAs, U.S. FATCA compliance requires direct engagement with the IRS, precise reporting, and ongoing oversight. Clear processes and reliable support can make the difference between routine compliance and unnecessary risk.

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Business Tax Planning, ROI, tax planning

20 Nov 2025

Measuring ROI: Tools for Profitability and Strategic Growth

Understanding ROI gives business leaders a clear view of which initiatives are creating value and which need reevaluation. With the right metrics, companies can make sharper, more confident decisions that accelerate growth and profitability.

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Business Tax Planning, tax planning

6 Nov 2025

The Role of Financial Forecasting in Business Planning and Decision-Making

Financial forecasting plays a critical role in helping businesses anticipate cash flow, assess risks, and plan strategically. By using pro forma statements and accurate projections, companies can make informed financial decisions that support stability and long-term growth.

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Business Tax Planning, tax planning

20 Aug 2025

Profits Interest in Tiered Partnerships

In structuring a private equity fund or other tiered partnership arrangement, care must be taken to ensure the safe harbor for profits interest received for services is preserved. It is important in the issuance of profits interest to carefully document and substantiate capital account book-ups to protect against IRS contest that the interest is a capital interest.

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tax planning

7 Aug 2025

Rollover of Hedge Fund Interest Fails IRA Rules: Estate of Caan Offers a Warning on Nontraditional Assets

When an IRA holds a nontraditional asset such as an interest in a private hedge fund, the Taxpayer must be extremely careful to provide the annual value for that interest to the custodian and to follow the rules in rolling that nontraditional asset to a new IRA. Failing to do so can result in significant tax implications.

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