Description
On Nov. 15, 2023, the U.S. Tax Court ruled that a fund was engaged in a U.S. trade or business based on the activities of its investment manager and was subject to the mark-to-market accounting rules of Sec. 475. This holding raises a number of issues and concerns for tax counsel, private funds, and managers. Counsel must identify these issues and implement strategies to minimize adverse tax consequences in light of the tax court ruling.
U.S. tax law provides several different withholding requirements for foreign partners, depending on the type of income the partnership receives and the manner in which the partnership conducts its activities. For partnerships engaged in a trade or business, income earned in connection with such business typically will be deemed effectively-connected income, which generates unique reporting and withholding duties for the U.S. partnership.
In YA Global Investments L.P. v. Commissioner, the fund manager collected fees from portfolio companies in connection with the fund's investments, but when filing the U.S. tax return, the fund took the position that the fund was not engaged in a U.S. trade or business and did not withhold taxes under Section 1446 on any income that was effectively connected with its U.S. trade or business and allocable to any foreign partners. The tax court ruled that the fund manager's activities were attributed to the fund and therefore engaged in a U.S. trade or business through its fund manager.
Tax counsel and advisers must go beyond the basics and understand the foundation of the holding and plan accordingly in order to properly advise clients who may be impacted.
Listen as our panel discusses the recent tax court decision in YA Global Investments L.P. v. Commissioner and its impact on non-U.S. investors, as well as offer critical tax planning considerations under current tax law in light of this recent tax court ruling.
Presented By
Mr. Freedman is a Principal in KPMG’s Financial Services Tax Practice, and serves as the firm’s Global Industry Leader for the firm’s Hedge Fund Tax Practice. For over 30 years, he has focused on a broad array of tax issues, across financial products and derivatives, cross-border structuring and transactions, partnership tax, and corporate tax, with an emphasis on issues related to the alternative investment and banking industries. Mr. Freedman has significant experience in both tax consulting and tax compliance and regularly advises clients on tax planning for structuring funds and portfolios. He offers clients an experienced perspective, having served in several senior-level in-house positions at major organizations in the international investment manager, securities dealer, and investment bank sectors, and is able to offer both buy-side and sell-side perspectives. Mr. Freedman is a member of the board of directors of the Wall Street Tax Association, as well as a past-president and past-chairman of its Federal Tax Committee. He is also a member of the Managed Funds Association Tax Committee and has participated in a number of industry group efforts through the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association. Mr. Freedman is a frequent speaker on topics that include alternative investments, financial products, and other tax issues related to the financial services industry and is a co-author of KPMG’s Derivatives Tax Handbook.
Mr. Leeds focuses his practice on the tax consequences of a variety of financial products and strategies, including digital assets, private funds, exchange-traded funds, litigation finance, life settlement, banking and insurance. His experience includes both exchange-traded and over-the-counter derivative transactions, and strategies for the efficient utilization of tax attributes—such as net-operating losses. Mr. Leeds regularly works with financial institutions on developing products and the related tax reporting considerations. He also advises businesses and individuals in establishing operations and relocating to Puerto Rico and has a substantial practice in private credit transactions. Mr. Leeds is well-known for his extensive writings on capital markets tax issues.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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BARBRI is a NASBA CPE sponsor and this 90-minute webinar is accredited for 1.5 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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Date + Time
- event
Tuesday, February 6, 2024
- schedule
1:00 p.m. ET./10:00 a.m. PT
- Overview of tax court ruling in YA Global Investments L.P. v. Commissioner
- Identifying foreign partners and offshore partnership structures
- Calculating effectively-connected taxable income (ECTI)
- Section 1446 tax liability
- Best practices for tax counsel, private funds, and fund managers
The panel will discuss these and other key issues:
- What are the key takeaways from the tax court's ruling in YA Global Investments L.P. v. Commissioner?
- What goes into the calculation of the withholding amount under Sections 864(c)(8), 1445, and 1446(f)?
- Differentiating between various form reporting requirements
- How do you remedy prior withholding noncompliance?
- What are the next steps and best practices for tax counsel, private funds, and managers to minimize adverse tax consequences?
Learning Objectives
After completing this course, you will be able to:
- Identify ECTI subject to partnership withholding
- Discern how to report claims of treaty exceptions to withholding requirements
- Determine how to calculate Section 1446 withholding amounts
- Recognize how to remedy prior noncompliance in partnership withholdings on foreign partners' income
- Field of Study: Taxes
- Level of Knowledge: Intermediate
- Advance Preparation: None
- Teaching Method: Seminar/Lecture
- Delivery Method: Group-Internet (via computer)
- Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
- Prerequisite: Three years plus business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of foreign information reporting requirements and ownership attribution rules; familiarity with foreign partnership structures and identifying foreign-source income. The webinar assumes attendee already has indepth knowledge of the rules for determining effectively-connected income, as well as a working understanding of how foreign tax treaties work.
BARBRI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.
BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
BARBRI CE webinars-powered by Strafford-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .
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