Blocker Structuring Under Current U.S. Tax Law: Key Considerations for U.S. Venture Funds and Their Investors

Recording of a 90-minute premium CLE/CPE video webinar with Q&A


Conducted on Thursday, June 17, 2021

Recorded event now available

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Course Materials

This CLE/CPE course will provide tax counsel and private investment professionals with a practical guide to structuring investments by private equity and venture capital funds (PEVC funds) in a manner that seeks to address the various tax sensitivities of PEVC fund investors.

Description

Investors in PEVC funds have various, sometimes competing, tax concerns when it comes to how their capital is invested. Common examples include U.S. tax-exempt investors who may be sensitive to the receipt of unrelated business taxable income (UBTI) and non-U.S. investors who may be sensitive to the receipt of income treated as effectively connected to a U.S. trade or business (ECI). While navigating the concerns of a diverse investor base is not a new task for PEVC funds, tax reform has added more wrinkles to the analysis.

This webinar will outline the benefits and potential risks to: (1) U.S. tax-exempt investors investing in "blocker" corporations to block UBTI and (2) non-U.S. investors investing in blocker corporations to block ECI. The panel will also consider the impact of blocker structures on U.S. PEVC fund investors not sensitive to UBTI or ECI. The webinar will also address the implications that tax reform has had on traditional structures and expectations.

Listen as our panel discusses key considerations for structuring investments in PEVC funds to address the various tax sensitivities of fund investors.

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Outline

  1. UBTI and UBIT impact of private equity, hedge fund, and offshore funds
  2. Blocker corporations
  3. Foreign vs. domestic structuring considerations
  4. Assets to hold in blocker corporations and capitalization issues
  5. Required filings
  6. Tax and operational risks

Benefits

The panel will review these and other noteworthy issues:

  • U.S. PEVC fund activities that generate UBTI
  • U.S. PEVC fund activities that generate ECI
  • Consequences to investors of UBTI/ECI
  • Blocker structures utilized by PEVC funds to mitigate the impact of UBTI/ECI
  • How PEVC fund focus and strategy impacts optimal blocker structure
  • Negotiation strategies for PEVC funds and their investors to ensure specific sensitivities are not overlooked

Faculty

Clegg, Jace
Jace E. Clegg

Partner
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian

Mr. Clegg's practice encompasses all areas of general corporate and partnership income taxation as well as the...  |  Read More

Huber, Brian
Brian D. Huber

Partner
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian

Mr. Huber supports venture capital and growth equity fund managers on all aspects of the fund lifecycle. He has...  |  Read More

Xu-T. Tina
T. Tina Xu

Associate
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian

Ms. Xu's practice encompasses all areas of general corporate and partnership income taxation as well as the...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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