Tax Challenges With Private Equity Management Fee Waivers Given Newly Heightened IRS Scrutiny
Structuring Waiver Arrangements in Light of the Proposed Regulations and Possible Changes to Profits Interest Rules
Recording of a 90-minute premium CLE/CPE webinar with Q&A
This CLE/CPE course will provide tax counsel with a review of private equity management fee waivers in light of the recently issued proposed regulations, the issues practitioners should consider when advising on fee waivers, the tax risks involved, and best practices for structuring waivers that maximize the chance of withstanding IRS scrutiny.
Outline
- Drafting and revising fee waiver structures
- Areas the IRS identifies in proposed regulations as problematic and potential for income reclassification
- Potential effects of reclassification (application of Section 409A or 4547A to disguised fees)
- Audit risks for existing fee waiver arrangements
Benefits
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 could make a waiver arrangement more defensible and how does the manner of the waiver 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 do the proposed regulations interact with other federal income tax rules?
Faculty
Matthew P. Larvick
Shareholder
Vedder Price
Mr. Larvick is a Shareholder in the firm’s Corporate Practice Area, specifically corporate taxation. His practice... | Read More
Mr. Larvick is a Shareholder in the firm’s Corporate Practice Area, specifically corporate taxation. His practice focuses on federal income taxation, including structuring, implementing and advising on partnership and LLC transactions and vehicles, M&As, and financing transactions. Mr. Larvick is an adjunct professor in the IIT Chicago-Kent College of Law Graduate Tax Program and is also a Certified Public Accountant.
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Daniel P. Meehan
Partner
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.
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Peter J. Withoff
Partner
Faegre Baker Daniels
Mr. Withoff is a partner in the Tax Group, focusing primarily on federal income tax matters. He has dealt with a wide... | Read More
Mr. Withoff is a partner in the Tax Group, focusing primarily on federal income tax matters. He has dealt with a wide variety of federal income tax issues including taxable and tax-free mergers and acquisitions, complex equity and debt offerings, as well as refinancings and workouts.
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