An Introduction to U.S. Tax Considerations in Hedge Fund Structuring

The hedge fund business has an extensive reach, with fund managers and investors active globally. A hedge fund is a pooled investment vehicle that "pools" private capital for investment in marketable securities and other liquid instruments. Unlike mutual funds, hedge funds are largely unregulated and are not required to register with the Securities and Exchange Commission; thus, a hedge fund is not subject to the several diversifications and other restrictions that limit a mutual fund's investment discretion. In addition, hedge funds are open-ended, accepting subscriptions from investors at regular intervals and allowing investors to achieve liquidity in the form of periodic redemptions. 

Maximizing tax-efficient returns for hedge fund managers and investors requires careful tax planning on the formation of a fund. This course introduces the tax considerations germane to hedge fund structuring and the key tax implications for the fund, various investor types, and fund managers.

Learning Objectives:

1. Recognize the key differences between an open-ended fund and a closed-ended fund

2. Identify the main fund classification options and issues for hedge funds

3. Gain an overview of the tax considerations and objectives of key investor categories, including U.S. taxable investors, U.S. tax-exempt investors, and non-U.S. investors

4. Discuss the tax considerations and objectives of fund managers

5. Examine the "plain vanilla" hedge fund master-feeder structure