President Obama Proposes Taxing Carried Interest as Ordinary Income Every couple of years there are various proposals floated around congress to tax the hedge fund performance fee (or “carried interest”) as ordinary income (see a previous post on this topic from 2009 here).  This week President Obama announced a proposal to [...]

Hedge Fund In-Kind Contributions Fund managers may allow investors to make “in-kind” contributions to the fund.  This means that instead of, or in addition to, a cash subscription, the manager may allow the investor to transfer securities or other assets to the fund in exchange for fund interests.  Both managers and investors [...]

Alternative Hedge Fund Compensation Structure At the very beginning of this year there was much discussion about the hedge fund compensation structure in light of the horrible returns from 2008.  Many funds lost money but managers aren’t typically subject to the same types of clawback provisions as private equity fund [...]

Secondary Hedge Fund Market Poses Issues for Fund Managers Recently there have been a number of groups springing up to provide a secondary hedge fund market.  While such platforms provide investors with a potential avenue to get out of their illiquid investment (the investment in the fund may be illiquid [...]

San Francisco’s Proposition Q and its Impact on Hedge Fund Managers Proposition Q Passes in a Landslide On November 4, 2008, San Francisco voters approved Proposition Q modifying the city’s Payroll Expense Tax by a resounding 74% of the vote. This little noticed proposition, which went into effect on January [...]

Legislation Introduced to Eliminate Carried Interest “Loophole” As we are all well aware, the partnership structure of hedge funds allows the management companies of these funds to receive an “allocation” of the fund’s income.  Under general partnership taxation principles, this allocation is taxed to the management company (and the other [...]

Obama to Propos Taxing Hedge Fund Carried Interest Groups such as the New York Times and Daily Finance are reporting that Obama’s proposed fiscal 2010 budget, which will be released tomorrow, will include provisions which will increase taxes for hedge fund managers (and private equity fund managers).   Such a provision [...]

It is very important that hedge fund managers always provide potential investors with hedge fund offering documents which are current and up to date.* Because of certain changes to the various hedge fund laws within the past few months (and because of the increased likelihood of future rules/regulations changes) a [...]

Below is Subchapter K of the Internal Revenue Code.  Most hedge funds are taxed as partnerships and we discuss some of these provisions from time to time on this website.  Please let us know if you have any questions on hedge fund tax or if you would like to start [...]