News & Analysis as of

UBTI

SBA Expands and Clarifies Ability of SBICs to Finance in Passive Businesses

by Pepper Hamilton LLP on

New SBA rule affects the holding company and the blocker corporation exceptions for SBICs’ financing passive businesses. On December 28, the U.S. Small Business Administration (SBA) released a Final Rule modifying its...more

IRS and Treasury Issue Proposed Regulations Easing Some of the Burden of the Fractions Rule

by King & Spalding on

Executive Summary On November 22, the Internal Revenue Service (“IRS”) and Treasury Department issued proposed regulations (REG-136978-12, the “Proposed Regulations”) under the “fractions rule” of Section 514(c)(9)(E) of the...more

IRS Proposes Helpful Changes to "Fractions Rule" Tax Regulations

by Holland & Knight LLP on

Proposed income tax regulations published by the Internal Revenue Service (IRS) on Nov. 23, 2016, amend the current regulations regarding the application of the "fractions rule" to partnerships that hold debt-financed real...more

More Worries For Private Equity Funds - Another Structuring Fix Against ERISA Withdrawal Liability Dismantled

by Locke Lord LLP on

In a landmark benefits decision, a Federal District Court in Massachusetts held that separate private equity funds sharing a general partner are jointly and severally liable under the Employee Retirement Income Security Act...more

IRS Provides Guidance on New Form 5500 Compliance Questions

by McGuireWoods LLP on

The Internal Revenue Service (IRS) has provided clarification regarding new “compliance questions,” principally for retirement plans, that appear on the 2015 Forms 5500 and 5500-SF. These questions should not be answered....more

Brother, Can You Spare a Dime?

by Gerald Nowotny on

Using Private Placement Variable Deferred Annuity (GAC) Contracts to Enhance the After-Tax Investment Return of Tax Exempt and Foreign Investors in Direct Lending Investments - Overview - Domestic and foreign...more

Split-dollar Life Insurance – A Tax-Leveraged Derivative for Hedge Fund Managers

by Gerald Nowotny on

The Emergency Economic Stabilization Act of 2008 ended the not so discrete secret of hedge fund managers, the deferred compensation arrangement with their offshore funds or as the New York Times described, “an unlimited Super...more

The Bespoke Solution—Advantages and Challenges in Tailoring Single Investor Funds

by Foley & Lardner LLP on

The world of private investment funds has been evolving to address the specific goals and expectations of investors, including pension plan sponsors and other investors with specific regulatory and economic needs. As a...more

Commission Payments to IC-DISC Recharacterized as Non-Deductible Dividends

In Summa Holdings, Inc. v. Commissioner, T.C. Memo 2015-119, the Tax Court recharacterized an exporter’s deductible commission payments made to an IC-DISC as non-deductible dividend payments to the exporter’s shareholders...more

California (Finally) Conforms to Federal Treatment of UBTI in Charitable Remainder Trusts

One of the most important tax attributes of charitable remainder trusts is that they are exempt from income tax – except, that is, when it comes to unrelated business taxable income (UBTI) of these trusts. For decades the...more

IRS Affirms Treatment of Short Sales for UBTI Purposes

by Mintz Levin on

Since there are many hedge funds that utilize short selling as part of their investment strategy, it is important for hedge fund investors, including tax exempt organizations, to understand the U.S. tax treatment of these...more

Charitable Planning with S Corporation Stock—Making It Work

Since 1998, charities have been able to own S corporation stock (“S stock”). However, the ownership of S stock by an exempt organization may result in either an unexpected tax burden or a liability rather than an asset for...more

Final Noncompensatory Partnership Options Regulations Could Affect the Tax Treatment of Penny Warrants and Other Arrangements

by Pepper Hamilton LLP on

Investments in partnerships (and other pass-through entities such as limited liability companies treated as a partnership) often involve the acquisition of warrants, options or other rights to acquire securities. This is...more

Advisory Committee on Tax Exempt and Government Entities Makes Recommendations on Reporting of Unrelated Business Taxable Income

The Advisory Committee on Tax Exempt and Government Entities (“ACT”), an IRS advisory panel, made several recommendations on issues relating to unrelated business taxable income (“UBTI”) in its annual report to the IRS (the...more

Proposed Regulation Incorporates IRS Litigation Position on UBTI for VEBAs and SUB Trusts

On February 6, 2014, the Internal Revenue Service (IRS) proposed new regulations for calculating the unrelated business taxable income (UBTI) of IRC section 501(c)(9) voluntary employees’ beneficiary associations (VEBA) and...more

My Broker at E.F. Hutton Says..........? -- Using Private Placement Variable Deferred Annuities (PPVA) to Invest in Real Estate...

by Gerald Nowotny on

Overview - American taxpayers have approximately $4.7 trillion invested in IRAs as of 2011. Only 2 percent of these assets or $94 billion are invested in self-directed IRAs. This is a surprising result when you...more

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