Archive - December 2010
Private Equity Freeze Starts to Thaw
While this post entry is not exactly related to private equity, venture capital or hedge fund taxation, the state of the market ought to be of interest to anybody that has an exposure to the fund business. We constantly follow reports by Pitch Book and Preqin to gain some insight into current industry trends. Pitch Book reports today that there is a renewed appetite among private equity funds for large deal exposure. According to Pitch Book, in 2010 the number of + $500 million investments have more than doubled for a total of 68 deals worth $77.6 billion. The story could be found at...
December 28, 2010 read more
Treaty Override Provision Dropped from 9/11 Bill
New York Senators Charles Schumer (D-N.Y.) and Kirsten Gillibrand (D-N.Y.) on December 21, 2010, announced the removal of a controversial provision from H.R. 847, the James Zadroga 9/11 Health and Compensation Act of 2010, which would have denied treaty benefits for certain deductible related-party payments. Under the provision, a foreign company operating in a treaty jurisdiction would be precluded from claiming treaty benefits with respect to deductible payments received from a related U.S. company if the foreign company is a subsidiary of a corporation based in a third country...
December 22, 2010 read more
Congress Extends Bush Tax-Cuts
After a prolonged and highly publicized debate between Democrats and Republicans, on Friday December 17th the President signed The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The law is colloquially known as the Bush Tax-Cuts Extender. Needless to say, the passage of this law was eagerly anticipated by both limited partners and managers of all sorts of funds. The two key provisions that impact funds and their partners are the 2 year extension of the 15% rate for qualified dividends and the 15% rate for long term capital gains. This law, in...
December 18, 2010 read more
Another Special Offshore Voluntary Disclosure Program in the Cards
By now everybody has heard of the UBS case and the crackdown on offshore tax evasion. The case was part of an orchestrated effort by the IRS to put a stop on hiding money offshore. As part of this effort the IRS introduced the Special Voluntary Disclosure Program which brought in approximately 15,000 disclosures from individuals holding foreign accounts. Many U.S. investors who have been less than forthcoming regarding their offshore holdings, including accounts in foreign private equity and hedge funds, took advantage of this program. However, the program closed in 2009. Since...
December 12, 2010 read more
New Guidance on Economic Substance
As many know, year 2010 was a very notable year when it comes to the economic substance doctrine. After several years, finally Congress enacted new Section 7701(o) as part of the Health Care and Education Reconciliation Act of 2010, and thus finally codified the long standing doctrine that emanated from Gregory v. Helvering many years ago. On its face, the enactment seemed simplistic enough, but it left practitioners with too many questions. In an attempt to address some of these questions, the IRS issued Notice 2010-62 on December 4th, 2010. The guidance addresses four principal...
December 07, 2010 read more