Archive - February 2015
Pilgrim’s Pride is Reversed in the 5th Circuit
Over a year ago, Pilgrim’s Pride litigated a Section 1234A issue in the Tax Court. The issue was whether the taxpayer could claim an ordinary business loss on the abandonment of securities, and more importantly, whether Section 1234A applies to the direct abandonment of securities as compared to the abandonment of “rights with respect of” securities. The taxpayer lost in the Tax Court but it prevailed in the 5th Circuit (Pilgrims's Pride v. Comm’r; No. 14-60295), and on top of that, quite spectacularly. The decision was published yesterday.In the private M&A and private...
February 26, 2015 read more
CCA 201507019 – Sec. 7701(g) Nonrecourse Debt Relevant for Sec. 475 Mark-to-Market, IRS Says
Here we have what appears to be a novel issue that could potentially resolve some confusion that various securitization financial players might have had in the past. The question CCA 201507019 answers is whether financial institutions who mark-to-market their portfolios under Sec. 475 must factor in their fair market value calculations any Sec. 7701(g) nonrecourse debt that encumbers the portfolio. Succinctly, the answer is yes. To those who do not recall what Sec. 7701(g) is about, it basically enacts the principles set forth in the famous Tufts case that most LLMs study in their first...
February 18, 2015 read more
SIFMA asks the IRS to issue a FAQ regarding “document repositories” under Regulations 1.1471-3(c)(6)(iv) and 1.1441-1(e)(4)(iv)(C)
We wanted to pass the following along in case you missed it. Apparently SIFMA members, who encompass some of the largest investment funds and financial institutions in the Country, are in a predicament regarding document repositories and whether current practices with respect to those repositories meet FATCA regulations. Investment managers have to provide various forms such as W-9s or W-8BEN-Es to withholding agents to open accounts and receive transaction authorization. For managers who have relationships with hundreds of investment funds this would encompass a lot of documents. According...
February 10, 2015 read more
Private Equity Management Fee Waivers – the Latest by Andy Grewal, Gregg Polsky and Others
This is not breaking news, but in light of the supposedly upcoming guidance regarding management fee waivers, we wanted to write a short bit about the status quo. We also want to highlight an article by Andy Grewal, which we thought did not get sufficient exposure commensurate with its quality. First a short description of what a fee waiver/conversion is. In a private equity fund the typical compensation structure is “two and twenty.” The twenty could be held by the same entity or a different entity from the one that holds the “two.” The “two” reflects fees for management...
February 04, 2015 read more