A few years ago, Assure had a client that was utilizing capital-raising SPVs to invest in startup companies. This client had a global network of both startup companies and investors. One particular deal needed to move quickly – a common occurrence for Assure. In the coming few days, this SPV needed to be set up, funds collected and then wired.
Our full suite of services help CFOs, CPAs, attorneys, and private equity organizers to navigate basic or complicated financial and regulatory requirements. We act as trusted fund tax advisors, putting our experience to work with best practices for tackling compliance and regulatory issues. Here we have compiled the most frequently asked questions about fund taxes, along with our experts' answers from their expertise in preparing taxes for over 5,000 funds:
When will I receive my K-1?
How will I receive my K-1?
I'm foreign, do I need to file a return?
Why does my K-1 show income/I never received this income?
I heard that the underlying investment went out of business or is on its way out. Why is there no loss on my K-1?
I invested in Fund A, why did I not receive a K-1?
How do I fill out the Form W8/9?
The company had a down round during the year. Why doesn't the loss show up on my K-1?
Why am I just getting this K-1? Aren't K-1s required to be sent by the end of January?
There is a distribution amount on my K-1, but I never received the cash. What happened?
Fund A holds a note from a foreign startup. Do we need to know if the company is a CFC and/or a PFIC?
Fund A had an exit, but some of the proceeds are being held in escrow. Will we recognize all of the gain this year?
Can we allocate different assets to specific investors?
How does a sales charge that comes out before money goes into a fund affect the investor's basis?
What is Effectively Connected Income and do our funds have it?
Do investors investing through exempt entities (i.e. charities, endowments, IRAs) need to worry about Unrelated Business Taxable Income?
The question every fund organizer should ask is whether their investment fund must comply with state Blue Sky notice filings. The short answer, is yes. Why? Because almost all investment fund offerings meet the definition of a “security” for purposes of federal and state disclosure and notice requirements.