Hedge Fund Tax Returns and K-1s
Akram takes pride in being a trusted resource to our alternative investment fund clients providing professional Net Asset Value (NAV) review and timely Schedule K-1 (“K1”) preparation services. Our extensive industry knowledge and industry-specific tax software help to reduce tax reporting errors and deliver high quality documents in a timely and accurate manner.
Hedge fund accounting and tax services include:
Assist investment managers with the launch of their fund vehicle, including organizational structuring, maintenance of the fund’s financial books, assistance with preparing and filing regulatory reports (Form-PF and Form-PQR) and the calculation of management and incentive fees with the goal to minimize overall tax exposure.
Thorough review of your fund’s NAV in accordance with the Limited Partnership Agreement (LPA) and Private Placement Memorandum (PPM) for both onshore and offshore investment funds.
Prepare federal and state tax returns, as well as provide ongoing federal, state and international tax consulting services.
Advise on foreign banking and investment reporting, including PFICs, Foreign Bank Account Reports (FBAR), Foreign Corporations, Foreign Partnerships, Foreign Disregarded Entities, as well as related issues regarding tax analysis for trading strategies.
Analysis of mark-to-market elections.
Serve as an IRS-approved Partnership Representative, communicating on your behalf in the event of an audit.
For easy reference, you may download our Alternative Investments Audit & Tax Services brochure (PDF).
Our qualified accounting team is well versed in the nuances of alternative investment fund tax matters, including Qualified Opportunity Zones and Partnership Representative requirements.
Watch our video on 10 Tips for Launching A Successful Alternative Investment Fund
In 2018, the Internal Revenue Service (IRS) began requiring partnerships to designate a Partnership Representative to communicate on its behalf in the event of an audit. Our team is comprised of experts in IRS compliance, making Akram the preferred Partnership Representative for your business.
Our Partnership Representative services include:
Access to an experienced accountant who will ensure adherence to IRC Section 6223 rules.
Meticulous management of all correspondence with the IRS.
Individualized guidance throughout the compliance process, including innovative solutions that are aligned with the latest regulatory rules.
Uncompromised and unparalleled customer service.
Qualified Opportunity Zones
The Qualified Opportunity Zone program was established by the Tax Cuts and Jobs Act (TCJA) to provide tax incentives for private, long-term investment in economically distressed communities across the U.S. Investors have an opportunity to defer and potentially reduce taxes on recognized capital gains through this program.
Qualified Opportunity Zone Property Explained
Qualified Opportunity Zone Property that is qualified opportunity zone stock, a qualified opportunity zone partnership interest or a qualified opportunity zone business property acquired after December 31, 2017, used in a trade or business conducted in a Qualified Opportunity Zone or ownership interested in an entity operating with such tangible property. Improvements in Qualified Opportunity Zone do not include golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetracks or other facilities used for gambling or liquor stores.
Tax Deferral and Savings
An Opportunity Zone Fund investment provides potential tax savings in three ways:
A taxpayer may elect to defer the tax on some or all of a capital gain if, during the 180-day period beginning at the date of sale/exchange, they invest in a qualified opportunity fund. Any taxable gain invested in an Opportunity Zone Fund is not recognized until December 31, 2026.
A taxpayer who defers gains through an Opportunity Zone Fund investment receives a 10% step-up in tax basis after five years and an additional 5% step-up after seven years.
Remaining in the Qualified Opportunity Fund for a minimum of 10 years will result in the cost basis of the property being equal to the fair market value on the date of sale/exchange.
Featured in News and Industry Publications
Lynnlry Browning from Bloomberg published an article in 2019 that featured our founder, Muhammad Akram, and Akram & Associates. "The IRS in theory matches the statements to federal returns to root out cheaters. But even though a copy goes to the IRS, you can’t rely on the 1099-B for your return,” said Muhammad Akram, an accountant and the founder of Akram in Cary, N.C., which caters to small hedge funds.
Smaller brokerages are more likely to issue statements that misreport basis or dates, Mr. Akram said, because they invest less in the technology required to generate the reports and often don’t use third-party software to tally values. But even Wall Street brokerages have inconsistencies, especially with reporting dividend income, he said. “It’s systemic,” Mr. Akram said. Read the full article "Conflicting Tax Forms Create Nighmares for Some Investors" on Bloomberg and Investment News."
Akram’s Insights for Fund Managers
Akram in the Media
- Conflicting Tax Forms Create Nighmares for Some Investors - Bloomberg.com
- Akram & Associates: Best Accounting Firm – Start-Up and Emerging Funds - Hedgeweek.com
- Dynamism and proactivity in times of uncertainty - Hedgeweek.com
- Akram & Associates adds five to team on back of 40 per cent growth in 2019 - Hedgeweek.com
- Akram & Associates continues to focus on emerging managers and US family offices - Hedgeweek.com
- Akram & Associates opens NYC office - Hedgeweek.com
Best Accounting Firm | Start-up & Emerging Funds
Akram is a winner in the Hedgeweek Americas Awards for consecutive 3 years 2021, 2022, and 2023
"We have been voted “Best Accounting Firm for Start-up & Emerging Funds”.
Contact Us for Investment Fund Accounting Solutions
We understand that clients in the Alternative Investments arena are extremely prudent. At Akram, we provide high-end, tailored fund accounting services with careful planning and an unmatched responsiveness that only a boutique accounting firm like ours can deliver. Contact us today to learn more about our specialized assurance, advisory, and tax services for hedge funds, commodity trading advisors, private equity and venture capital funds, digital asset funds, insurance dedicated funds, real estate funds, day traders, investors, family offices, and high net worth individuals.