Tax Issues With Private Equity Management Fee Waivers

Anticipating Areas of IRS Scrutiny and Structuring Defensible Fee Waivers

Recording of a 110-minute CLE/CPE webinar with Q&A


Conducted on Wednesday, November 14, 2012

Recorded event now available

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Program Materials

This teleconference will provide counsel with a review of the management fee waiver currently being investigated by the New York Attorney General (NY AG), the various ways fee waivers can be structured, the tax risks involved, and best practices for structuring waivers that maximize the chance of withstanding IRS scrutiny.

Description

With recent investigations by the NY AG's Office of private equity (PE) firms’ use of management fee waivers, practitioners representing PE firms should take another look at how these waivers are structured to ensure that they can withstand potential IRS scrutiny.

Although the IRS has indicated that these arrangements warrant study for potential noncompliance, it has taken no action to do so yet. The success of an IRS challenge would likely depend on how the fee waiver is structured and the conditions on the general partner’s receipt of the converted carried interest.

Other potential risks under federal partnership tax law include a challenge to the safe harbor for profits interests in a partnership—or a finding that the structure is either a disguised non-partner transaction under Section 707(a)(2)(A) or a guaranteed payment under Section 707(c).

Listen as our authoritative panel of attorneys outlines the various ways fee waivers can be structured, the tax risks involved and best practices for structuring waivers that maximize the chance of withstanding IRS scrutiny.

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Outline

  1. Fee waiver structures currently under investigation by NY AG
  2. Potential IRS challenges to fee waivers and inherent tax risks
  3. Best practices for structuring defensible fee waivers

Benefits

The panel will review these and other key questions:

  • 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 converted carried interest could make the waiver more defensible and how does the timing of the election impact the risks?
  • What other potential risks under federal partnership tax principles exist, and how can fee waivers be structured to minimize this risk?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Adam D. Gale
Adam D. Gale

Partner
Mintz Levin

He is a Member in the Corporate & Securities Section and practices in the New York office.  He focuses his...  |  Read More

Edouard S. Markson
Edouard S. Markson

Partner
Chadbourne & Parke

Mr. Markson advises corporations and partnerships on the U.S. Federal income tax aspects of domestic and...  |  Read More

Raj Tanden
Raj Tanden

Member
Mintz Levin

He leads the Firm’s West Coast tax practice and Los Angeles office transactional and tax practices, and is a...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Audio

$297

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CPE Not Available

$297