Tax Planning, Tax Court, Investment Funds

Tax Court Calls Bluff on Hedge Fund’s Basket Option Contracts

Cadwalader, Wickersham & Taft LLP on 4/29/2025

The Tax Court recently held that a hedge fund’s basket option contracts were in substance tax ownership of the underlying basket securities. The hedge fund, through its affiliated entities, entered into 10 basket option...more

Another U.S. IRS Victory in the Self-Employment Tax Arena: Denham Capital Management

Hogan Lovells on 1/31/2025

For those keeping score at home, it’s currently two wins for the IRS in as many years, and nada/zilch/zero for the fund managers, at least when it comes to the limited partner exception for self-employment taxes (the “Limited...more

Private Funds Year in Review: Key Tax Developments That Shaped the Industry in 2024

Morgan Lewis on 1/31/2025

In 2024, several significant tax developments emerged that are set to impact the private fund industry in 2025. These changes include pivotal US Tax Court (Tax Court) opinions, updates to Internal Revenue Service (IRS) forms,...more

Tax Court Reaffirms Soroban Holding that “Active” Limited Partners are Subject to Self-Employment Tax

Foley & Lardner LLP on 1/13/2025

On December 23, 2024, the Tax Court ruled in Denham Capital Management LP v. Commissioner (T.C. Memo. 2024-114), that limited partners that actively participated in the activities of a fund manager formed as a state law...more

Taxpayer Victory in US Tax Court Highlights Need for Properly Structuring Partnership Profits Interests

Morgan Lewis on 5/26/2023

A recent US Tax Court case upholds profits interest treatment for a taxpayer’s receipt of a partnership interest granted in exchange for services. The case highlights how properly structuring and documenting the grant of a...more

"Recent Court of Appeals Decision Provides Hope for Taxpayers Fighting for Congressionally Sanctioned Tax Benefits"

Skadden, Arps, Slate, Meagher & Flom LLP on 2/24/2017

For the second time in just over a year, the U.S. Court of Appeals for the Sixth Circuit reversed the United States Tax Court and affirmed the right of a taxpayer to structure its affairs in a manner that takes into account...more