IRS Looks At Fund of Funds' Management Fees
Filed in archive Hedgetalk by Alex Akesson on July 16, 2008
In a typical fund of funds structure, an investment is made by a limited partner into an UTP which in turn invests in several lower teir partnerships (LTPs). Both groups pay an annual management fee to an investment manager
based on assets under management. Since each LTP was, on the facts assumed by the IRS, engaged in the trading of securities, the management fee is an ordinary and necessary business expense and can still recieve tax benefits.More at; IRS Restricts Deduction of Fund of Funds' Management Fees
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