Minimizing IRS Scrutiny of Private Equity Management Fee Waivers: Structuring Defensible Waiver Agreements
Recording of a 90-minute premium CLE/CPE webinar with Q&A
This CLE/CPE course will explore designs for private equity management fee waivers in light of the latest developments in the law, industry practice and potential tax reform legislation. The panel will discuss critical terms for agreements to minimize the risk of IRS challenge to new arrangements and offer guidance in light of recent IRS audit activity of existing fee waiver arrangements.
- Common management fee waiver structures
- Overview of the proposed regulations
- Entrepreneurial risk
- Other factors including gross vs. net income allocations, capped allocations and hard-wired arrangements
- 2017 audit activity focused on fee waiver arrangements
- Potential effects of reclassification (application of Section 409A or 4547A to disguised fees)
- Strategies for revising fee waiver arrangements
- Implications of tax reform
The panel will review these and other key issues:
- How are management fee waivers typically structured and what are the tax risks inherent in these structures?
- What conditions on the general partner’s receipt of the special allocation could make the arrangement more defensible and how does the timing of the election impact the risks?
- What are the key factors identified by the proposed regulations for analyzing whether a fee waiver arrangement will withstand IRS scrutiny?
- How would tax reform affect fee waiver arrangements?
Kirkland & Ellis
Mr. Butler's practice focuses on the tax aspects of complex business transactions and reorganizations, with a... | Read More
Mr. Butler's practice focuses on the tax aspects of complex business transactions and reorganizations, with a particular concentration on private equity and real estate fund formation, infrastructure and renewable energy investments, real estate joint ventures, mergers and acquisitions, and bankruptcy restructurings. He is a published author and frequent speaker on tax issues.Close
Daniel P. Meehan
Kirkland & Ellis
Mr. Meehan is a tax partner in the Chicago office of Kirkland & Ellis LLP. His practice focuses on the tax... | Read More
Mr. Meehan is a tax partner in the Chicago office of Kirkland & Ellis LLP. His practice focuses on the tax aspects of forming private equity funds, credit and other debt funds, hedge funds and venture capital funds, the tax issues specific to both fund sponsors and investors, and the tax aspects of private equity transactions, mergers and acquisitions. He has extensive experience advising clients with respect to the tax aspects of partnerships, LLCs and S corporations, as well as nonqualified and equity-based compensation arrangements.Close