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Accounting Back Office |
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HEDGE
FUNDS
PREPARATION
Tax Advice, Compliance and Return Preparation Services:
If you use GreenTrader to help launch
your hedge fund our tax attorneys and CPAs will consult you on the
best tax structure for your money-management business, including the needs
of your investors in various states, and your own personal tax needs (federal
and state). With the scheduled repeal of carried
interest tax breaks in 2011 - per President Obama's 2010 budget passed
in 2009 - investment managers may want to file an S-corp election on their
LLC management companies to reduce self-employment taxes. The S-corp SE
tax loophole is still open and even that may be closed soon too.
Our core business is planning and preparing tax returns for traders and
investment management businesses. We can prepare your hedge fund partnership
tax returns including all K-1s for investors. We are a leading firm on
trader
tax status, tax elections for securities (Section
475 MTM), futures and forex,
carried
interest tax breaks (with a repeal scheduled for 2011), and self-employment
tax (reducing it with an S corp election). We also offer a timely
and efficient service at very competitive prices. We want to prepare your
2009 investment management business tax returns and help you plan for
2010 too.
We cover tax planning and preparation tips for investment management businesses
in Green's
2010 Trader Tax Guide. Here are some excerpts.
- HEDGE FUNDS CAN QUALIFY FOR TRADER TAX STATUS
If the manager of a hedge fund is also an owner of that hedge fund, he can bring trader tax status to the hedge fund at entity level for the benefit of all the hedge fund investors and owners. Even though investors are passive in the hedge fund based on the “trading rule” exception in SECTION 469, they receive the business breaks passed through the entity on Schedule K-1. With one exception: Passive managers’ investment-interest expense is an itemized deduction subject to investment income limitations on Form 4952. Active managers may deduct business interest expense in the non-passive activity column on Schedule E. Conversely, the manager of a separately managed account can’t deliver trader tax status business breaks to their managed account investors because the investor isn’t trading; the outside third-party manager is trading. The manager is like an outside broker or automated trading service and the investor is doing just that — investing.
- … BUT MTM IS NOT ALWAYS GOOD FOR HEDGE FUNDS …
Many hedge–fund managers find it too restrictive to deal with the segregation of investment rules within SECTION 475 and skip the MTM election entirely. These managers have trouble determining business positions vs. segregated investment positions on the day they purchase a security, which is required for segregating investments. Many of these hedge funds seek to defer capital gains at year-end to save their investors a tax bill (and to avoid investor redemption requests to pay related taxes), and to seek lower long-term capital gains tax rates with deferral. Running afoul of the segregation rules can drag long-term positions into MTM ordinary gains treatment at year-end and thereby forgo both deferral and lower long-term capital gains tax rates. These hedge funds haven’t been focused on tax-loss insurance in SECTION 475 MTM.
We are pleased to have Brocha
Lewenstein CPA join our investment management tax team. Ms. Lewenstein
prepared the tax returns for one of the biggest and most profitable U.S.
bank's in-house hedge funds and she brings excellent experience and knowledge
to our team.
Learn about some excellent ideas on how to structure your hedge fund business,
including tax advantages using trader
tax status and mark-to-market
accounting, in Robert A. Green, CPA & CEO's article published
in Active
Trader magazine,
click here. If you are already a trader tax client of GreenTraderTax,
you can carry your trader tax status and MTM tax benefits into your actively
traded hedge fund for the benefit of your investors. This gives your fund
an edge in the marketplace.
What's most special about our firm is that our tax advice doesn't stop
with your hedge fund structuring. Our attorneys and CPAs work closely
together with you from start up through operations & accounting to
annual tax preparation to make sure we deliver on all the tax benefits
we conceived up front. We also stay closely in touch with our clients
to add new tax benefits to their funds as they come into law over the
years. Other firms sometimes drop the ball with their own separate tax
departments and many law firms don't communicate early on with their client's
CPA firms. Their CPA firms later discover that the fund documents are
not as good as they could have been and they are too hard to change after
the fact. Many tax benefits become lost in translation. That's not the
case with GreenTrader. We coordinate all tax (and other) benefits throughout
the development, operation and compliance process, so you and your investors
get what you deserve. The irony is it even costs less this way. Synergy
saves in this case.
Ready for Help?
Tax compliance, planning and annual income tax return preparation
services:
GreenTraderTax CPAs will prepare the federal and all required state tax
returns for your hedge funds, and other investment vehicles. We generally
also prepare the tax returns for your management companies and you individually.
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Please email us at info@greencompany.com
or contact
us.