Tax Court: Fund Manager Gets Business Bad Debt Treatment for Loan to Advisor
Fund managers' compensation typically consists of two elements: a management fee--generally 1-2% of NAV (which in addition to paying the managers, is applied toward other operating expenses), and a performance fee--generally 20% of gains. In addition, fund managers may receive an investment return from any capital they invest into the fund (typically, around 1% of the fund's capital). The Tax Court's holding in Todd A. Dagres et ux. v. Commissioner; 136 T.C. No. 12 (March 28, 2011), indicates that the relative amouints of these components can be determinative of the issue of whether a...
April 04, 2011 read more