PHILIP S. GROSS

PARTNER

Phil Gross is the chair of Kleinberg Kaplan’s Tax Department and has been advising fund clients and other clients at the firm since 1993. Phil provides advice on federal, state, local and international tax issues concerning hedge funds, private equity funds and real estate funds, in addition to other myriad tax issues confronting business entities and individuals. Phil was named a “Best Lawyer” in the Tax Law category of Best Lawyers in America 2021.

Practices

About

Phil counsels clients on structuring and restructuring funds; structuring investment managers and general partners; compensating managers and employees; investing in funds; and seeding, buying and selling management entities.

He also advises clients on planning and structuring securities transactions, foreign investment in U.S. real estate, acquisitions and dispositions of assets, nonqualified deferred compensation, Puerto Rico tax planning, ERISA matters, and numerous other tax issues.

Phil speaks at many conferences on fund tax issues and is an active member of a number of tax groups.

Phil has been named a New York Super Lawyer since 2014.

Education

New York University School of Law (LL.M. in Taxation, 1989)
Certified Public Accountant, New York 1989
Vanderbilt University School of Law (J.D., 1986)
College of William & Mary (B.B.A., 1983) (beta gamma sigma)

Bar Admissions

1992, U.S. Tax Court

1990, New York

1988, New Jersey

Speaking Engagements

International Tax Considerations for Foreign Funds Investing in the US

Co-Speaker, Private Investment Funds Tax Master Class, Financial Research Association, May 20-21, 2020

Compensation of Fund Managers and Employees

Speaker, Taxation of Financial Instruments and Transactions Conference, New York State Society of Certified Public Accountants, January 2020

Ask Us Anything

Speaker, Private Investment Fund Tax and Accounting Forum, Financial Research Associates, November 2019

Implications of 163(j) Within Effective Tax Planning

Speaker, Private Investment Fund Tax and Accounting Forum, Financial Research Associates, November 2019

Carried Interest Update; Other Compensation Ideas and Tax Considerations

Speaker, Effective Hedge Fund Tax Planning, Insight Exchange Network, September 2019

Tax Planning for Management Companies and Compensating Employeesand Ask Us Anything

Speaker, Private Investment Funds Tax and Accounting Master Class, Financial Research Associates, May 2019

Ready for the New Partnership Audit Rules—Tax Regulatory and Practical Considerations

Speaker, CSC, March 2019

Carried Interest Legislation Update

Speaker, Private Investment Fund Tax & Accounting Forum, Financial Research Associates, November 2018

Hedge Fund Tax and Regulatory Update: An Overview of the Tax Cuts & Jobs Act and Other New Developments

Speaker, Private Investment Funds Tax Master Class, Financial Research Associates, May 2018

Trader vs. Investor and Trade or Business Income & Ask the Experts – Get Answers to Specific Questions about K-1s and other Hot Topics
Speaker, Financial Research Associates, Hedge Fund Tax 101 & K-1 Boot Camp, January 2018

Taxation of Financial Instruments and Transactions Conference

Co-Chair, NYSSCPA Foundation Accounting Education, January 2018

Family Offices Year-End Income Tax Planning in Light of Potential Tax Changes

Speaker, KPMG Sunrise Series: Preparing for Individual Year-End Tax Planning, December 2017

Effective Fund Structures, Terms and Compensation in the Current Environment

Speaker, Effective Tax & Accounting Practices for Hedge Funds and Private Equity Funds, Financial Research Associates, November 2017

The New Partnership Audit Rules and Their Impact on Investment Partnerships

Speaker, New York State Society of Certified Public Accountants, January 2017

Exploring the Future of 457A: How to Move Forward Without Offshore Fee Deferrals

Speaker, 18th Annual Advanced Hedge Fund Tax Forum, Financial Research Associates, November 2016

Tax Considerations When Making Seed Deals and Mergers and Acquisitions of Managers

Co-Speaker, The Private Investment Fund Tax Master Class, Effective Hedge Fund Tax Practices, May 2016

Alternative Investing Mid-Year Tax Update

May 2016, EisnerAmper Webinar, May 2016

Impact of New Partnership Audit Rules

Co-Speaker, Goldman Sachs 2nd Annual Prime Services GC/CCO Conference, March 2016

What Should Investment Partner Professionals be Thinking of?co-speaker

Co-Chair, NYSSCPA Taxation of Financial Instruments and Transactions & DMS Webinar, January 2016

Basic Tax Considerations Affecting Hedge Funds

Financial Research Associates, Hedge Fund Tax 101, January 2016

Taxation of Peer-to Peer Lending and Debt Instruments

Co-Speaker, Effective Hedge Fund Tax Practices, Financial Research Associates, November 2015

Management Compensation & Incentive Allocations – Mastering the Basic’s

Co-Speaker, Private Equity Tax 101, Financial Research Associates, December 2015

Compensation: Trends and Strategies in Structuring Manager and Employee Compensation

Co-Speaker, The Private Investment Fund Tax Master Class – Effective Hedge Fund Tax Practices, Financial Research Associates, June 2015

Trader vs. Investor and Trade or Business Income

Speaker, Hedge Fund Tax 101, Financial Research Associates, January 2015

2015 Taxation of Financial Instruments and Transactions Conference

Co-Chair, 2015 NYSSCPA Conference, January 2015

Hedge Fund and Private Equity – Current Tax Developments

Co-Speaker, Hot Issues in U.S. Taxation of Financial Products and Financial Institutions, Bloomberg BNA, November 2014

Structuring Compensation: Trends and Strategies in the Current Environment”

Co-Speaker, Effective Hedge Fund Tax Practices, Financial Research Associates, November 2014

Impact of Revenue Ruling 2014-18 on Compensation of Hedge Fund Managers and Employees

KKWC Webinar, June 2014

K-1 Kombat: How Rising Tax liabilities Will Change the Behavior of HNW Investors

2014 Private Placement Life Insurance and Variable Annuity Forum, Institute for International Research, June 2014

How Some Funds are Handling Increasing Tax Rate Burdens

Private Investment Funds Tax Master Class, Financial Research Associates, May 2014

FATCA Focus Webinar

Co-Speaker, Presented by Kleinberg Kaplan and DMS, January 2014

Multiyear manager compensation; Hedge fund employee compensation

Co-Chair, Panelist, 2014 NYSSCPA Taxation of Financial Instruments and Transactions Conference, January 2014

Puerto Rico – Taxation, Tax Incentives & Lifestyle

Co-Speaker, Lawline, November 2013

Hedge Funds and Private Equity Funds – Current Tax Developments

Co-Speaker, Hot Issues in U.S. Taxation of Financial Products and Financial Institutions, Bloomberg BNA, November 2013

The Ins and Outs of Insurance Dedicated Funds

Co-Speaker, seminar by Kleinberg Kaplan and Concept Capital, July 2013

The Investment Side of the Equation

Co-Speaker, 2013 Private Placement Life Insurance and Variable Annuity Forum, Institute for International Research, June 2013

Taxation of Fund Investments in Real Estate

Speaker, The Private Investment Fund Tax Master Class – Effective Hedge Fund Tax Practices, Financial Research Associates, May 2013

Tax and Legislative Update: Making Sure That Your Fund is Prepared for the Upcoming Tax Season

Co-Speaker, Optimizing Hedge Fund Business Operations Conference, Hedge Fund Business Operations Association, January 2013

Unrelated Business Taxable Income — What every fund should know,and “State income and state tax withholdings,

Co-Speaker, Hedge Fund Tax 101 and The K-1 Boot Camp, Financial Research Associates and Hedge Fund Business Operations Association, January 2013

Taxation of Financial Instruments and Transactions Conference

Co-Chair, Co-Speaker, Foundation for Accounting Education, Taxation of Informed Investments, January 2013

Hedge fund & private equity — Current developments

Co-Panelist, Current Issues in U.S. Taxation of Financial Products and Financial Institutions, BNA CITE, December 2012

Taxation of Fund Investments in Real Estate

Co-Speaker, Effective Hedge Fund Tax Practices, Financial Research Associates, November 2012

Foreign Account Reporting for Alternative Investment Funds and Their Investors: FBAR and Form 8938

Co-Speaker, Thomson Reuters webinar, June 2012

Tax and Regulatory Update: What Has Changed and How Do These Changes Affect Hedge Funds

Co-Speaker, Effective Hedge Fund Tax Practices, Financial Research Associates, May 2012

Unrelated Business Taxable Income — What Every Fund Should Know

Co-Speaker, Hedge Fund Tax 101 Seminar, Financial Research Associates, January 2012

Latest Hedge Fund Tax Issues

Co-Speaker, Surgent McCoy Webinar, January 2012

Tax and Legislative Update, Optimizing Hedge Fund Business Operations

Co-Speaker, Hedge Fund Business Operations Association and Financial Research Associates, January 2012

Taxation of Financial Instruments and Transactions Conference

Co-Chair, NYSSCPA conference, January 2012

Equity Derivatives & the HIRE Actand “Hedge Funds & Private Equity – Current Tax Developments

Co-Speaker, Hot Issues in Taxation of Financial Products, BNA/CITE Seminar, December 2011

Unrelated Business Taxable Income

Co-Speaker, Financial Research Associates, 13th Annual Hedge Fund Tax Practices, November 2011

Fund Formation

Panelist, iGlobal Forum:2nd Alternative Investments Summit, May 2011

Unrelated Business Taxable Income

Private Investment Funds Tax Master Class, May 2011

Carried Interest and the HIRE Act

Co-Speaker, NYSSCPA Seminar discussing recent and anticipated tax law changes, January 2011

NYSSCPACurrent Trends in Structuring Funds for Optimum Efficiency

Effective Hedge Fund Tax Practices, Financial Research Associates, December 2010

Simplifying the Taxation of Passive Foreign Investment Companies

Financial Research Associates Webinar, July 2010

Unrelated Business Taxable Income — What Every Fund Should Know

Hedge Fund Tax 101 Seminar, Financial Research Associates, June 2010

Taxation of Hedge Funds: Onshore and Offshore Concerns

ACI’s 6th National Advanced Forum on Regulation and Enforcement of Hedge Funds & Investment Advisers, American Conference Institute, June 2010

Current Hedge Fund Tax Issues

Viteos Fund Services Annual Hedge Fund Forum, May 2010

Controlled Foreign Corporations; Impact on Hedge Funds and Private Equity Funds

Effective Hedge Fund Tax Practices, Financial Research Associates, May 2010

Structuring and Restructuring Funds and Managers in Light of Recent Tax Changes and Proposed Changes

Co-Speaker, NYSSCPA Taxation of Financial Products Seminar, January 2010

Current Developments in Taxation Including TALF Issues

Co-Speaker, NYSSCPA Investment Comany Conference, November 2009

Avoiding Tax Traps for Investments in Controlled Foreign Corporations and Passive Foreign Investment Companies

Co-Speaker, Effective Hedge Fund Tax Practices, Financial Research Associates, November 2009

Tax Consequences of Hedge Fund Structures

Co-Speaker, Financial Research Associates Webinar, October 2009

U.S. Distressed Debt Investing, Structuring Funds to Minimize Doing Business Risks

2009 Taxation of Financial Instruments and Transactions Conference, Foundation for Accounting Education, Debt Modification Panel, January 2009

Realizing Your Maximum Potential through Offshore Funds

Institute for International Research’s Hedge Fund & Compliance Forum, June 2008

Key Tax Issues Affecting Hedge Funds

Hedge Fund Tax Accounting, and Administration Master Class, FRA, May 2008

Establishing Investment Management Operations in London — U.S. Income Tax Planning

FRA Webinar Series, January 2008

Structuring Offshore Funds for Tax Efficiency and Compliance — Avoiding Costly and Complicated Mistakes When Starting an Offshore Fund
FRA Webinar Series, December 2007

Accounting For Uncertainty in Income Taxes — FIN 48

Effective Hedge Fund Tax Practices, FRA, November 2007

The Impact of the American Jobs Creation Act of 2004

Institute for International Research Conference on Tax and Reporting Practices for Hedge Funds, October 2004

Publications

Getting in the zone

Opportunity Zones Special Report, September 2019

Considerations for Hedge Fund Managers When Evaluating Management Shares for Their Cayman Funds

Hedge Fund Law Report, June 2019

Hedge Funds – Tax Issues and Planning to Consider Before Year-End

Bloomberg BNA Daily Tax Report, December 2016

How to Draft Key Hedge Fund Documents to Take New Partnership Rules Into Account

The Hedge Fund Law Report, February 2016

Tax Court Decision Upholding “Investor Control” Doctrine May Nullify Tax Benefits for Some Policyholders Investing in Hedge Funds through Private Placement Life Insurance

The Hedge Fund Law Report, July 2015

The Impact of Revenue Ruling 2014-18 on Compensation of Hedge Fund Managers and Employees

The Hedge Fund Law Report, June 2014

Tax Practitioners Discuss Taxation of Foreign Investments and Distressed Debt Investments at FRA/HFBOA Seminar (Part Three of Four)

The Hedge Fund Law Report, January 2014

Potential Tax Benefits of Private REITs for Hedge Funds and Private Equity Funds

Marcum Private Investment Forum, Spring 2012

Tax Issues in Structuring Your Hedge Fund

Marcum & Kliegman LLP’s Private Investment Forum, Second Quarter 2004

Tax Planning for Offshore Hedge Funds – the Potential Benefits of Investing in a PFIC

Journal of Taxation of Investments, January 2004

To Defer or Not to Defer

Private Investment Forum, First Quarter 2001

Tax Advantages of the Section 83(b) Election Can Be Significant

The Journal of Taxation, January 1997

Insights

The Impact on Fund Investors and Fund Managers of the New Regulations on the Business Interest Expense Limitation under Section 163(j)

August 25, 2020

The Tax Cuts and Jobs Act (the “TCJA”), enacted on December 22, 2017, made significant changes to Section 163(j) of the Internal Revenue Code of 1986, as amended (the “Code”), regarding the deductibility of business interest expense. For tax years 2018 through 2025, Section 163(j) of the Code generally limits a taxpayer’s business interest expense…

Kleinberg Kaplan Attorneys Recognized in Best Lawyers in America

August 21, 2020

Premier boutique law firm Kleinberg Kaplan has been recognized in the Best Lawyers in America 2021 edition. Several firm attorneys were listed in the Best Lawyers in America and in the inaugural Best Lawyers in America: Ones to Watch categories. Best Lawyers in America 2021 Philip Gross (Tax Law) Jeffrey B. Kolodny (Trusts & Estates) James R.…

Helping Clients Navigate COVID-19 (Updating)

August 18, 2020,

Kleinberg Kaplan is working closely with our clients to provide counsel and guidance during these unprecedented times. A selection of our recent thought leadership pieces related to the implications of COVID-19 includes: Corporate Considerations  The PPP Just Got Better (June 10, 2020): Chris Davis, Dov Kleiner, Uri Rosenwasser and Benjamin Goldman discuss the key highlights of the…

A Tax Planning “Hat Trick” for Funds Acquiring Portfolio Company Debt

July 9, 2020

As a result of the COVID-19 pandemic, many companies are having difficulty meeting payment obligations on their outstanding debt. However, thanks to a combination of the U.S.-Irish income tax treaty and Section 108 of the Internal Revenue Code of 1986, as amended (the “Code”), private equity funds (and other funds) may be able to find…

More Global High-Wealth Audits Expected Soon

June 22, 2020

The Commissioner of the IRS Large Business and International Division recently announced that the Global High Wealth Industry Group of the IRS will initiate several hundred audits of high-wealth individuals. The audits are expected to commence beginning July 15 when the suspension of certain examination and collection functions of the IRS is lifted. A representative…

Fed Announces More Updates to TALF 2.0 and New List of FAQs

May 13, 2020

On May 12, 2020, the Federal Reserve Board (the “Fed”) updated its term sheet of the Term Asset-Backed Loan Facility (“TALF 2.0”) that it authorized on March 23, 2020 and updated on April 9, 2020. The full updated term sheet can be found here. The Fed also released a list of frequently asked questions (“FAQs”)…

Unexpected Tax Consequences of Commercial Lease Modifications

April 30, 2020

In a prior Kleinberg Kaplan client alert, we noted that COVID-19 related economic disruptions have caused both landlords and tenants to consider restructuring their commercial lease arrangements. Tenants that enter into discussions with landlords seeking rent relief may be successful. However, landlords and tenants should be aware that they could run into unexpected tax consequences in…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End 2019

December 17, 2019

Year-end has always been a time for tax planning and we send our clients and friends our year-end tax planning newsletter on an annual basis. Similar to the end of 2018, there does not appear to be significant tax legislation on the horizon. Also, there are still many unanswered questions regarding the 2017 Tax Cuts…

Certain Fund Managers May Be Required To File TIC Form SHL By August 30, 2019

August 21, 2019,

Fund managers may be required to file Treasury International Capital (“TIC”) Form SHL, Report of Foreign-Residents’ Holdings of U.S. Securities, Including Selected Money Market Instruments (SHL (2019)) by August 30, 2019, based on the fair value of certain U.S. securities determined as of June 28, 2019, issued to foreign persons. This newsletter focuses on the…

Proposed Regulations May Substantially Mitigate CFC Tax Issues for Funds – Certain Funds May Want to Issue Amended 2018 K-1s

June 20, 2019,

The Internal Revenue Service issued proposed regulations on Friday, June 14th, addressing various aspects of the controlled foreign corporation (“CFC”) rules, including with respect to global intangible low-taxed income (“GILTI”) and, significantly, who is a 10% or more shareholder for inclusion purposes regarding subpart F income and GILTI income. Among other things, the proposed regulations…

Tax Planning for Losses

December 26, 2018,

This newsletter is a brief follow-up to our recent year-end tax newsletter. Click here for our year-end newsletter. Since our 2018 year-end newsletter was distributed, the stock market has been very volatile and decreased significantly (although the market was up a lot today, December 26th, fortunately). Many funds may have significant unrealized losses. This newsletter…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End

December 5, 2018

Year-end has always been a time for tax planning and we send our clients and friends our year-end tax planning newsletter on an annual basis. Unlike the end of 2017, there does not appear to be significant tax legislation on the horizon, although there still could be some changes enacted in 2019, including some potential…

Potential One-Time Opportunity Today For Federally Deductible Charitable Contribution With A Credit Against State And Local Taxes -Check Must Be Mailed Today, August 27th-

August 27, 2018

The Internal Revenue Service and Treasury issued proposed regulations on August 23rd which are proposed to be effective beginning tomorrow, August 28th. As such, the proposed regulations offer a potential opportunity, which expires today, August 27th, in which to make contributions to a state charitable fund to potentially receive a charitable deduction for federal tax…

New Connecticut Tax on Pass-Through Entities — Impact on Hedge Funds and Hedge Fund Managers

June 12, 2018,

On May 31, 2018, Connecticut enacted the “Act Concerning Connecticut’s Response to Federal Tax Reform”. Among other things, the Act imposes a 6.99% tax on certain pass-through entities (which, prior to the Act, were not subject to any Connecticut entity-level income tax). This tax may have significant implications for fund managers and other businesses with…

Mark-to-Market Election

March 13, 2018,

Section 475(f) of the Internal Revenue Code of 1986, as amended, provides that a trader in securities or commodities can make elections to “mark-to-market” their securities and/or commodities and treat increases or decreases in value as ordinary. A fund must be a trader, and not an investor, in order to be able to make a…

Carried Interest Taxation – IRS Issues Notice 2018-18 Stating it Intends to Issue Regulations that “Corporation” does not include an S Corporation

March 1, 2018,

On March 1, 2018, Notice 2018-18 was released, announcing that the Department of the Treasury and the Internal Revenue Service (the “IRS”) intend to issue regulations providing guidance on the application of Section 1061 of the Internal Revenue Code, which relates to the taxation of carried interest. The Notice further announced that the regulations will…

Carried Interest Planning Under the New Tax Legislation

December 21, 2017,

–Year-end planning should be Considered– The tax legislation, which passed Congress and is expected to be signed by the President shortly, includes a new section of the Internal Revenue Code which is entitled “Partnership Interests Held in Connection with Performance of Services.” This section (Section 1061) changes the taxation of “carried interests” in certain circumstances,…

Important CRS Deadline and FFI Agreement Renewal Notices

June 22, 2017,

Reminder: Upcoming Deadline for the Common Reporting Standard As indicated in our newsletter sent on June 9th, the deadline for Common Reporting Standard (CRS) notification is Friday, June 30, 2017. Any Cayman Islands funds that have not completed the required notification on the Cayman Islands AEOI Portal must do so by Friday, June 30, 2017.…

FATCA and Common Reporting Standard Upcoming Deadlines and New Requirements

June 9, 2017,

Upcoming Deadlines for Cayman Islands Funds (Including Cayman Master Funds) June 30, 2017 Notification: U.S. FATCA and Common Reporting Standard U.S. FATCA notification to the Cayman Islands Tax Information Authority (the “Cayman TIA”) is required for entities that have not previously notified the Cayman TIA and entities that need to update an existing notification (for…

The Department of Labor Officially Delays the New Fiduciary Rule from April 10, 2017, to June 9, 2017

April 14, 2017,

On April 7, 2017, the Department of Labor officially delayed, until June 9, 2017, the applicability date of regulations that would change the definition of an “advice fiduciary” for plans covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended.…

The Department of Labor Has Proposed Delaying the New Fiduciary Rule for Sixty Days from April 10, 2017, to June 9, 2017

March 9, 2017,

In April 2016, the Department of Labor (“DOL”) released regulations that, among other things, modify the definition of an “advice fiduciary” for plans covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The new definition also applies to IRAs and other non-ERISA plans which are subject to Section 4975 of the…

Section 475(f) Mark-to-Market Election

February 16, 2017,

A Section 475(f) election might be beneficial for a fund experiencing losses in 2017 or possibly where a fund has significant net unrealized losses coming into 2017. Not as well known is that a section 475(f) election might also be beneficial where a fund is experiencing gains or has significant unrealized net gains coming into…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End

November 21, 2016,

This newsletter briefly highlights certain tax issues and planning that hedge fund managers should consider (or reconsider) before year-end. 1. Trump Presidency. With the election of Donald Trump as President, year-end tax planning is “business as usual” – that is, generally accelerating deductions and deferring income since rates are not expected to increase in 2017.…

Broader U.S. Withholding on Dividend Equivalent Amounts is Effective Beginning on January 1, 2017, for Agreements Entered Into On or After Such Date

November 18, 2016,

In General Section 871(m) of the U.S. Internal Revenue Code of 1986, as amended, was enacted in 2010 and imposes a 30% U.S. withholding tax (subject to reduction by an applicable tax treaty) on dividend equivalent amounts paid (or deemed paid) on certain swaps and equity linked instruments referencing U.S. equities if the long party…

Foreign Bank Account Reports (FBARs)

May 31, 2016,

OVERVIEW This newsletter serves as our annual reminder of the requirement to file Reports of Foreign Bank and Financial Accounts (“FBARs”) where applicable. For calendar year 2015, FBARs are required to be filed on or before June 30, 2016. The form (which was known as Form TD F 90-22.1 before 2015) is known as FinCEN…

U.S. FATCA, U.K. FATCA and CRS – Upcoming Deadlines and Revised Self-Certification Form

May 10, 2016,

Upcoming Deadlines for Cayman Islands Funds (Including Cayman Master Funds) June 10, 2016, Notification: (extended from April 30, 2016) U.S. FATCA and U.K. FATCA Cayman Notification A Cayman fund (including a Cayman master fund) is required to notify the Cayman Islands Tax Information Authority (“TIA”) (via the Cayman portal) that it is a reporting financial…

Proposed 2017 Budget Would Eliminate Self-Employment Tax Exception Utilized by Managers

February 10, 2016,

Self-employment tax is imposed on individuals’ trade or business income. Net investment income tax (“NIIT”) generally applies to high-income individuals’ investment income. Both taxes generally apply to income earned directly or through flow-through entities, and for most fund managers are applied at a marginal rate of 3.8% (although the self-employment tax has a lower effective…

Section 475(f) Mark-to-Market Elections

February 8, 2016,

A Section 475(f) election might help ease the pain for taxable investors in a fund experiencing losses in 2016 or possibly where a fund has significant unrealized losses coming into 2016. Specifically, Section 475(f) provides that a trader in securities or commodities can make elections to “mark-to-market” their securities and/or commodities and treat increases or…

Congress Passes Extenders Bill Affecting REITs

December 21, 2015,

On December 18, 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (“PATH”), the permanent “extenders” legislation. Included among the provisions are many potentially significant changes affecting REITs and foreign investment in U.S. real property through REITs. This newsletter highlights a few of the provisions. REIT Spinoffs Disallowed The extenders bill would…

Common Reporting Standard (“Global FATCA”) – New Self-Certification Forms

December 16, 2015,

The Cayman Islands government just released new individual and entity self-certification forms, which were developed for purposes of compliance with U.S. FATCA, U.K. FATCA and the Common Reporting Standard (“CRS”). Under U.S. FATCA and U.K. FATCA, Cayman funds are required to identify investors that are “specified U.S. persons” or “specified U.K. persons” and to report…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End

November 18, 2015,

This newsletter briefly highlights certain tax issues and planning that hedge fund managers should consider (or reconsider) before year-end. Tax rates are scheduled to remain the same in 2016. 1.  Federal Income Tax Rates in 2015 and 2016.      Long-term capital gains and qualified dividend income:    25%*      Ordinary income:    44.6%*      (*includes effect of net income investment tax and 3%…

BEA Form BE-180, 2014 Benchmark Survey For Financial Services Transactions, is due by November 1st (but extensions may be obtained)

October 20, 2015,

The Bureau of Economic Analysis (BEA) Form BE-180, the 2014 Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Foreign Persons, is due by November 1, 2015 (30 or 60 day extensions may be obtained), and may apply to many hedge fund managers. The purpose of Form BE-180 is for the BEA…

IRS Extends Certain FATCA Deadlines

September 25, 2015,

On September 18, 2015, the IRS issued Notice 2015-66 announcing its intent to amend FATCA regulations to extend timelines for certain transition rules and to reduce certain compliance burdens on withholding agents by modifying the rules for grandfathered obligations. Most importantly, withholding on gross proceeds will not be required until January 1, 2019 (extended from…

Final and Temporary Regulations on Dividend Equivalent Withholding Are Issued

September 22, 2015,

On September 17, 2015, the IRS issued final regulations (the “Final Regulations”) requiring withholding on certain dividend equivalent payments beginning January 1, 2017. (Please see our prior newsletter regarding the delay of imposing withholding on dividend equivalents.) The Final Regulations reflect some important changes suggested in comments to the IRS following the issuance of the…

Tax Court Case Uses “Investor Control” Doctrine to Tax Inside Build-up of Private Placement Life Insurance

July 7, 2015,

The tax benefits of making investments through private placement life insurance (“PPLI”), including investments in hedge funds, are very significant (i.e., the potential elimination of income tax and possibly estate tax as well). For information on the tax benefits and risks of PPLI click here to see the chapter written by partner Jeff Bortnick from…

Foreign Bank Account Reports (FBARs)

June 9, 2015,

OVERVIEW This newsletter serves as our annual reminder of the requirement to file Reports of Foreign Bank and Financial Accounts (“FBARs”). For calendar year 2014, FBARs are required to be filed on or before June 30, 2015. The form, which was formerly known as Form TD F 90-22.1, is now known as FinCEN Report 114.…

Treasury Postpones The Effective Date for Dividend Equivalent Withholding Regulations for One Year Until January 1, 2017!

May 8, 2015,

Senior counsel for the Treasury Office of Tax Legislative Counsel announced today that the effective date for proposed regulations regarding U.S. withholding tax on dividend equivalent payments (e.g., payments on certain equity swaps or other derivatives referencing U.S. equity securities) has been postponed for one year from January 1, 2016, to January 1, 2017. As…

Hedge Funds – Upcoming FATCA Compliance Deadlines

April 7, 2015,

This legal update highlights certain important upcoming FATCA compliance deadlines for Cayman Islands funds (i.e., offshore standalone funds, offshore feeder funds, and offshore master funds). Register with the Cayman Islands on or before April 30, 2015. Each Cayman Islands fund must register with the Cayman Islands on or before April 30, 2015. Funds must register…

Hedge Funds – Update Regarding FATCA Compliance Issues

December 12, 2014

This newsletter discusses important FATCA compliance issues that hedge funds should consider before the end of the year.   Though the phased implementation of FATCA has afforded hedge funds additional time to comply with FATCA, important  deadlines are approaching. 1. Offshore funds must register with the IRS (i.e., obtain a GIIN) to avoid FATCA withholding. While…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End

November 11, 2014

This annual newsletter briefly highlights certain tax issues and planning that hedge fund managers should consider (or reconsider) before year-end. Tax rates are scheduled to remain the same in 2015, but with the recent filing of 2013 tax returns by many high net worth individuals, taxpayers are even more aware of the increased tax rates…

IRS Issues Chief Counsel Advice on Self-Employment Tax

September 10, 2014,

Overview On September 5, 2014, the IRS released a Chief Counsel Advice (ILM 201436049), which discusses the application of self-employment tax to members of a limited liability company providing investment management services. The CCA concludes that all members of the limited liability company (the “LLC”) are subject to self-employment tax on their distributive shares of…

IRS Issues Final Instructions for New FATCA Forms

June 27, 2014

OVERVIEW We have previously issued newsletters discussing FATCA generally, preparation for compliance, and developments in the timeline for implementing FATCA. On June 25, 2014, the IRS released final instructions to new Form W-8BEN-E. This follows last week’s release of final instructions to Form W-8IMY. The FATCA world has been waiting for these instructions. FATCA GENERALLY…

FATCA Extension Announced

March 31, 2014

The IRS has just announced that the April 25th deadline for fund managers to register their offshore funds and offshore master funds with the IRS and obtain Global Intermediary Identification Numbers (“GIINs”) has been extended to May 5th. Obtaining a GIIN by May 5, 2014, will allow a fund to avoid withholding under FATCA. IRS…

–FATCA– What Hedge Fund Managers Need To Do Now

February 28, 2014

Most hedge fund managers, understandably, have held off doing heavy lifting regarding FATCA in anticipation of guidance to be issued and forms to be finalized (and possibly holding out hope that FATCA would be delayed for another 6 months or even repealed). At this point, hedge fund managers that manage offshore funds need to take…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End

December 4, 2013

This annual newsletter briefly highlights certain tax issues and planning that hedge fund managers should consider (or reconsider) before year-end. Tax rates are scheduled to remain the same in 2014. FATCA compliance deadlines are beginning to approach (unless they are further delayed) and net investment income tax final regulations were just issued. Federal Income Tax…

IRS Extends FATCA Deadlines by Six Months

July 11, 2013

On July 12, 2013 the Internal Revenue Service (the “IRS”) issued Notice 2013-43 (the “Notice”) extending the deadline for the implementation of the Foreign Account Tax Compliance Act (“FATCA”). In general, the FATCA deadlines have been extended by six months. With no final revised W-8 forms, intergovernmental agreements still in a state of flux and…

Hedge Funds – Tax Issues and Planning to Consider Before Year-End 2012

November 12, 2012

This annual newsletter briefly highlights certain tax issues and planning that hedge fund managers should consider (or reconsider) before year-end. Although tax planning at the end of each year is always important, tax planning at the end of 2012 is crucial due to potential tax rate increases. Even with the election over, there is still…

June 30th Deadline – Foreign Bank Account Reporting (FBAR)

June 17, 2012

This Hedge Fund Tax Alert serves as a reminder for filing of Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. For the calendar year 2011, this should be received (not merely mailed) by June 30, 2012. By June 30th of each succeeding calendar year, U.S. persons (1) with foreign accounts that in…

IRS Offshore Voluntary Disclosure Program – Practical Q&A

March 21, 2012

On January 9, 2012, the IRS reopened its Offshore Voluntary Disclosure Program (“OVDP”), a limited federal income tax amnesty for unreported foreign assets and income. This newsletter identifies key features of the OVDP for U.S. taxpayers and highlights the risks and issues that all taxpayers should consider in evaluating the OVDP. If you have unreported…