Hedge Funds and New IRS Partnership Audit Regulations

Advanced Tax Strategies in Structuring Private Investment Funds in Light of New IRS Rules

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


Conducted on Wednesday, October 26, 2016

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel with guidance on the impact of the new IRS Partnership Audit Rules on the structure and operations of hedge funds and private investment funds. The panel will discuss structuring considerations for new funds in light of the new regulations, and will detail necessary adjustments to the operating agreements of currently operating funds and partnerships.

Description

The new IRS Partnership Audit regulations present potentially significant issues and risks for hedge funds and other private investment fund partnerships. Indeed, President Obama specifically mentioned hedge funds as an intended object of scrutiny when he signed the law containing the new regulations. Tax counsel advising private fund partnerships need to fully grasp the import of the new regulations, both in structuring new funds and modifying existing partnerships.

A significant challenge facing fund partnerships and their advisers is addressing the competing tax preferences of different types of fund investors, including U.S. taxable, U.S. tax-exempt, U.S. government, non-U.S. taxable, non-U.S. pension funds, and non-U.S. sovereign investors. Fund structures can include different approaches to using “blockers” and feeder funds to address these various interests and minimize U.S. taxes.

This webinar is designed to provide a thorough guide to structuring hedge funds and other private investment fund partnership structures in light of the new regulations. The event will address formation issues under the new audit regime, detailing the changes in partner taxation approach and available elections, and will discuss possible changes to existing fund partnership structures.

Listen as our authoritative panel of practitioners provides a practical update to the challenges of structuring hedge fund and private investment fund partnerships under the new IRS partnership audit rules.

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Outline

  1. Balancing competing tax objectives of investors in structuring private investment funds
    1. Tax objectives of taxable U.S. investors
    2. Tax objectives of non-taxable U.S. investors (pension plans, endowments, other tax-exempt investors and governmental entities)
    3. Tax objectives on non-U.S. investors
    4. Tax objectives of sovereign investors
  2. Tax objectives of fund managers
  3. Fund structuring issues and options
  4. Structuring new private investment funds in light of the new partnership audit regulations
  5. Elections and steps tax counsel should consider now to protect existing hedge funds and private investment partnership funds

Benefits

The panel will discuss these and other critical issues:

  • Structuring considerations to balance competing tax preferences of major private fund investors
  • How can the use of blockers and feeder funds accommodate the needs of particular investors?
  • What changes will the new IRS partnership audit regulations bring to structuring new hedge fund and private investment fund partnerships?
  • What elections and other steps should tax counsel be considering now for existing private investment fund partnerships to avoid negative tax and operational consequences?
  • What challenges do sovereign investors face in retaining their status as Section 892 investors?

Faculty

Lawrence Hill
Lawrence Hill

Partner and Chair, Tax Controversy and Litigation Department
Shearman & Sterling

Mr. Hill is Global Head of the Tax Controversy and Litigation Group and Global Head of Financial Institutions for his...  |  Read More

Loy, Olga
Olga A. Loy

Partner
Jenner & Block

Ms. Loy focuses on all aspects of tax planning, private equity, regulatory and compliance work, merger and acquisitions...  |  Read More

James D. McCann
James D. McCann

Partner
Kleinberg Kaplan Wolff & Cohen

Mr. McCann has extensive experience in the areas of domestic and international taxation. He counsels clients regarding...  |  Read More

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