Akram's Latest Alternative Investments Insights

In June and July, Pennsylvania and Washington without any fanfare, became the first two states in the nation to explicitly list non-fungible tokens (NFTs) as digital assets subject to sales and use taxes.  

The British Virgin Islands (BVI) published the BVI Business Companies (Amendment) Act, 2022 on August 12, 2022, introducing some significant changes for BVI companies which come into effect beginning January 1, 2023.

The recently enacted Inflation Reduction Act of 2022 contains several new environment-related tax credits that are of interest to individuals and small businesses. The Act also extends and modifies some preexisting credits.

President Joe Biden on August 24 announced a three-part plan to address student loan debt, including forgiveness of up to $20,000 for some borrowers and extension of the repayment freeze a final time, until the end of this year.

Malta was recently upgraded by the Financial Action Task Force (FATF) after being taken off the list of Jurisdictions under Increased Monitoring, informally known as the ‘grey list’.  Malta was promoted by the FATF, an inter-governmental body tasked with tackling money laundering by highlighting ways to improve working practices, after the country made a series… Read More »

President Biden signed into law the Inflation Reduction Act (the Act), below are highlights of key tax-related changes in the Act. 15% Corporate Alternative Minimum Tax Based on Book Income The current corporate income tax rate is 21% of taxable income, the Act establishes a 15% corporate alternative minimum tax (AMT) on the adjusted financial statement… Read More »

Form PF (Private Fund) has been used by private fund advisers to describe required information regarding their fund’s operations. On August 10, 2022, the SEC proposed amendments to Form PF that “are designed to provide greater insight into private funds’ operations and strategies” (see the proposal announcement and accompanying fact sheet). The proposed amendments would… Read More »

Taxpayer Will not be a NY Resident In Matter of  Nelson Obus, dated June 30, 2022, a New York State appeals court held that an individual domiciled in New Jersey and working in New York City will not be deemed a statutory resident of New York based on limited use of a vacation home located… Read More »

Tax Loss Harvesting Current market volatility can present an ideal opportunity regarding Tax Loss Harvesting for hedge funds to realize losses for the benefit of offsetting future capital gains tax, and we at Akram are prepared to help our clients navigate the intimidating tax rules. Breaching tax rules can diminish or negate any potential benefit… Read More »

BVI Economic Substance Act (ESA) Reporting Scope: The ESA potentially affects new and existing BVI companies (companies incorporated or re-registered under the BVI Business Companies Act, 2004 [the BCA]) and limited partnerships, as well as foreign companies and foreign limited partnerships that are registered in the BVI (together, “legal entities”). The ESA does not apply… Read More »

SALT Cap Workaround for S-Corporations and Partnerships New York’s fiscal year 2023 budget contains an opportune provision that permits “resident S corporations” to get larger tax benefits under the state’s Pass-Through Entity Tax (PTET) regime. Under the new rules, beginning with tax year 2022, S corporations in which all shareholders are New York State residents… Read More »

SEC 2022 Examination Priorities Division of Examinations (the “Division”) of the Securities and Exchange Commission (“SEC”) published its 2022 examination priorities. We have mentioned below all and focus only on the Private Funds and Digital Assets due to interest of our clients:  Private funds;  Emerging Technologies and Crypto-Assets.  Standards of Conduct;  Environmental, social and governance… Read More »

The Securities and Exchange Commission (SEC) voted to propose amendments to the Investment Advisers Act of 1940 on February 9, 2022, if adopted, will have a significant impact on private fund managers. Private Fund Advisers will be prohibited from conducting certain activities Adviser could not charge certain fees and expenses to a private fund or… Read More »

House Ways and Means Committee Chairman Richard Neal (D-MA) on September 15 approved its sections of the $3.5 trillion infrastructure bill that mostly addresses social issues and plans to pay for them with tax increases on the wealthy and corporations. Chairman Neal’s tax increase proposals are projected to raise federal revenues by more than $2… Read More »

If the IRS does call a taxpayer, it should not be a surprise because the agency will generally send a notice or letter first. Understanding how the IRS communicates can help taxpayers protect themselves from scammers who pretend to be from the IRS with the goal of stealing personal information. The first contact from the… Read More »

The Senate recently passed the Infrastructure Investment and Jobs Act contains significant provisions that expand the scope of cryptocurrency tax reporting. Broker Definition Amended / Expanded IRC Section 6045 would be amended to define a broker as including “any person who is responsible for regularly providing any service effectuating transfers of digital assets on behalf… Read More »

The Senate on August 10 voted to pass a $1 trillion bipartisan infrastructure bill (H.R. 3684, the INVEST in America Act) that includes $550 billion in new spending on highways, bridges, waterways, transit, airports, the electric grid, and broadband. The Senate bill includes other tax and non-tax offsets, including a new cryptocurrency information reporting requirement… Read More »

On August 16, 2021, ” a qualified client threshold” under Rule 205‑3 of the Investment Advisers Act of 1940 (“Advisers Act”) will increase (i) from $1 million to $1.1 million (assets under management test), and (ii) from $2.1 million to $2.2 million (net worth test). Subscription documents for certain private funds and investment management agreements for certain… Read More »

It is an uncertain time to prepare for any possible changes to the tax code. Tax planning for any proposed changes is challenging due to the uncertainty around which tax provisions will pass. However, the more knowledgeable taxpayers are about the possibilities, the more high-income taxpayers can achieve their tax planning goals and adjust their… Read More »

The US Treasury released a 114-page “Green Book” general explanation of tax proposals included in President Joe Biden’s fiscal year (FY) 2022 budget submission to Congress on May 28, 2021. The President’s budget proposes to increase IRS funding by $1.3 billion to $13.2 billion as part of efforts to collect $778 billion over 10 years… Read More »

Monday, May 17 is the deadline for more than just individual returns. Here is a list of some other May 17 tax deadlines: Individual return extension requests– Extend beyond May 17 by filing Form 4868 or by making an electronic tax payment. Contributions to IRAs and health savings accounts– 2020 contributions to individual retirement arrangements… Read More »

Trader Tax Status (TTS) is not easy to qualify. There is no statutory law with objective tests for trader tax eligibility. Subjective court case law requires a two-part test: Taxpayers’ trading activity must be substantial, regular, frequent, and continuous. A taxpayer must seek to catch swings in daily market movements and profit from these short-term… Read More »

The IRS has provided guidance on tax relief for a tax deduction for food or beverages from restaurants. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. Tax Deduction for Foods & Beverages The temporary… Read More »

The Internal Revenue Service (IRS) announced yesterday that the deadline for filing 2020 individual income tax return has been extended to May 17, 2021 (from April 15, 2021). Taxpayers have more time to apply the tax relief and changes contained in recent stimulus legislation (American Rescue Plan). Individual Income Tax Return Extended to May 17… Read More »

Fund managers should be aware of a number of changes in reporting requirements for the tax year 2020. Funds are required to report each partner’s capital account using a tax basis capital method in accordance with 2020 Partner’s instructions for Schedule K-1(Form 1065) and  Notice 2020-43. Tax-Basis Capital Reporting Funds had no choice to convert… Read More »

President Biden signed the American Rescue Plan Act (“ARPA”) of 2021 on March 11, 2021, a massive $1.9 trillion stimulus package intended to address the extraordinary impact of the coronavirus pandemic.  Important highlights are mentioned below: HIGHLIGHTS: Stimulus payments and additional supplemental unemployment benefits to individual taxpayers Aid to states and municipalities, hospitals, and schools… Read More »

Selecting the right hedge fund structure requires careful planning and a diligent approach as there are many moving pieces that need to be addressed before accepting outside capital. New operational and regulatory requirements have added complexities and cost to organizing and running a fund vehicle in the U.S. and abroad. Aligning yourself with strong service… Read More »

Hedge funds in addition to venture capital, private equity, and cryptocurrency funds are typically structured as limited partnerships (LPs) or limited liability companies (LLCs). Both LPs and LLCs are taxed as partnerships by default, which means that they are pass-through vehicles for tax purposes. Hedge Funds are Taxed as Partnerships Pass-through means there is typically… Read More »

Private investment funds are generally subject to annual financial statement audits as a matter of accountability to investors. This audit requirement may be self-imposed by fund management or may exist under federal or state investment advisor regulations. Surprise Examination vs. Private Investment Fund Audit A private investment fund, by definition, will always have “custody” of… Read More »

The Small Business Administration (SBA) has released an application on January 8, 2021 and clarify how borrowers can qualify and apply for the second round of Paycheck Protection Program (PPP) loans. First-time and second-draw PPP borrowers are eligible for second round of PPP loans if they meet the eligibility requirements. The second round of loans… Read More »