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Taxation of Investment Partnerships: Hedge and Private Equity Funds, Carried Interest, Bermuda Reinsurance

Note: CLE credit is not offered on this program

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

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Conducted on Tuesday, December 10, 2024

Recorded event now available

or call 1-800-926-7926

This webinar will address the complex rules surrounding the taxation of investment partnerships. Our panel will discuss how private equity and hedge funds are taxed, the latest guidance on taxation of carried interests, and utilizing Bermuda reinsurance to mitigate taxation. They will provide comprehensive examples of scenarios and strategies explaining the taxation of partners investing in these funds.

Description

IRC Section 732 provides guidelines for tax-free distributions of property to partners. The exception to this treatment is the distribution of marketable securities. Section 731(c) dictates that distributions of marketable securities are treated as cash distributions to partners and thereby subject to tax. The exception to this exception is a distribution of marketable securities made to a qualified partner in an investment partnership. (IRC Sec731(c)(3)(A)(iii)).

Private investors might invest in a hedge fund or private equity funds. The former generally invests in publicly traded assets, while the latter invests in private businesses. Hedge funds typically focus on high-return, high-risk, shorter-term investments, while private equity investments target long-term growth investments. Fund managers often receive a carried or profits interest in exchange for services rendered to the partnership. These "applicable partnership investments" are subject to the carried interest provisions under IRC Section 1061. Section 1061 curbs long-term capital gains treatment for income received by partners who provide services. Partnership advisers, members, and managers need to understand the complex taxation principles surrounding investment partnerships.

Listen as our panel of federal taxation experts simplifies the complex rules surrounding taxation of hedge funds, private equity funds, and other investment partnerships.

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Outline

  1. Taxation of investment partnerships: introduction
  2. Hedge funds
  3. Private equity
  4. Carried interest
  5. Other considerations
  6. Examples and strategies

Benefits

The panel will cover these and other critical issues:

  • The definition of an investment partnership under IRC Section 731
  • Key considerations for taxation of private equity funds
  • The latest guidance on Section 1061 carried interest
  • Utilizing Bermuda reinsurance to minimize taxation

Faculty

Cagnetta, Richard
Richard A. Cagnetta, CPA
Partner
Citrin Cooperman Advisors

Mr. Cagnetta is a partner focused on providing tax advisory and compliance services to the firm’s asset...  |  Read More

Cincotta, Vincent
Vincent J. Cincotta
Director
Andersen Tax

Mr. Cincotta is a Director in the Alternative Investment Funds practice. He has over 20 years of experience with...  |  Read More

Mazzacca, Toni
Toni Mazzacca, CPA
Partner
Forvis Mazars

Ms. Mazzacca has over 20 years of experience delivering insightful local, federal and global tax services to clients in...  |  Read More

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