{"product_id":"taxation-of-u-s-investment-partnerships-and-hedge-funds-isbn-9780470605752","title":"Taxation of U.S. Investment Partnerships and Hedge Funds","description":"\u003cb\u003eA new, lucid approach to the formulation of accounting policies for tax reporting\u003c\/b\u003e  \u003cp\u003eUnraveling the layers of complexity surrounding the formulation of accounting policies for tax reporting, \u003ci\u003eTaxation of US Investment Partnerships and Hedge Funds: Accounting Policies, Tax Allocations and Performance Presentation\u003c\/i\u003e enables your corporation to implement sound up-front accounting and tax policies in order to reduce the overall cost of CFO and legal functions within a U.S. Investment partnership.\u003c\/p\u003e \u003cul\u003e \u003cli\u003eUnderstand the pitfalls and optimize across legitimate policies that are consistent with the IRS regulations\u003c\/li\u003e \u003cli\u003ePresents a clear roadmap for accounting, tax policies, tax filing and performance presentation for US investment partnerships and hedge funds\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eProviding tremendous understanding to a complex topic, \u003ci\u003eTaxation of US Investment Partnerships and Hedge Funds\u003c\/i\u003e is guaranteed to demystify the inner workings of the formulation of accounting policies for tax reporting.\u003c\/p\u003e \u003cp\u003ePreface xiii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 \u003c\/b\u003e\u003cb\u003eThe Arcane World of Hedge Funds and Investment Partnerships 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Is a “Hedge Fund”? 1\u003c\/p\u003e \u003cp\u003eU.S. Venture Partnerships 3\u003c\/p\u003e \u003cp\u003eTypes of U.S. Hedge Fund Entities and the U.S. Tax Code 4\u003c\/p\u003e \u003cp\u003eOrganizing a Typical U.S. Hedge Fund 6\u003c\/p\u003e \u003cp\u003eInvestor Clienteles in Hedge Funds 10\u003c\/p\u003e \u003cp\u003eForeign Investors in a U.S. Hedge Fund 14\u003c\/p\u003e \u003cp\u003eOffshore Funds 14\u003c\/p\u003e \u003cp\u003eU.S. Investors in Offshore Funds 17\u003c\/p\u003e \u003cp\u003eU.S. Investors in Swiss Bank Accounts 19\u003c\/p\u003e \u003cp\u003eU.S. Investors in Madoff-Like Managed U.S. Trading Accounts 23\u003c\/p\u003e \u003cp\u003eSize of the Global Hedge Fund Industry 25\u003c\/p\u003e \u003cp\u003eFund-of-Funds 28\u003c\/p\u003e \u003cp\u003eIncentives of the Hedge Fund Manager and Investors 30\u003c\/p\u003e \u003cp\u003eValuation of a Hedge Fund Management Company 31\u003c\/p\u003e \u003cp\u003eEconomies of Scale in Hedge Funds 33\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 \u003c\/b\u003e\u003cb\u003eThe Structure of Hedge Funds 35\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOrganizing a Typical Offshore Hedge Fund 35\u003c\/p\u003e \u003cp\u003eMaster-Feeder Structuring of Onshore\/Offshore Arms: Organizing a Hedge Fund for Clienteles 39\u003c\/p\u003e \u003cp\u003eU.S. Withholding Agent for U.S. Withholding Taxes on Foreign Investors 44\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 \u003c\/b\u003e\u003cb\u003eHedge Fund Fees 47\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eStarting Point: The Partnership Agreement 47\u003c\/p\u003e \u003cp\u003eFund Valuation at Discrete Opening Time Points 48\u003c\/p\u003e \u003cp\u003eCalculation of Fixed Fees 49\u003c\/p\u003e \u003cp\u003eCalculation of Performance Fees 55\u003c\/p\u003e \u003cp\u003eClaw-Back Provision: Performance Fee Returned to Limited Partners 66\u003c\/p\u003e \u003cp\u003eRepresentation of a Fund’s Net Asset Value (NAV) per Share 71\u003c\/p\u003e \u003cp\u003eBlack-Scholes Formula Valuation of Performance Fees 74\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 \u003c\/b\u003e\u003cb\u003eHedge Fund Accounting and Tax Filing 79\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePartnership Accounting for U.S. Funds 79\u003c\/p\u003e \u003cp\u003eIRS Tax Return Filings for U.S. Hedge Funds 80\u003c\/p\u003e \u003cp\u003eFinancial Statements for Hedge Funds and Venture Funds 85\u003c\/p\u003e \u003cp\u003eInterim Valuation: The Core of a Hedge Fund’s Accounting Operation 93\u003c\/p\u003e \u003cp\u003eBooks of Account and Financial Statements for Hedge Funds 96\u003c\/p\u003e \u003cp\u003eAudit of an Offshore Fund 97\u003c\/p\u003e \u003cp\u003eAudit of a U.S. Fund 98\u003c\/p\u003e \u003cp\u003eCapital Account Audit for Both Offshore and U.S. Funds 99\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 \u003c\/b\u003e\u003cb\u003ePartner Tax Allocations in U.S. Partnerships 101\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eU.S. Tax Allocation Rules Governing U.S. Partnerships 101\u003c\/p\u003e \u003cp\u003eTax Components of U.S. Investment Partnership Income 103\u003c\/p\u003e \u003cp\u003eFixed Fees: Income to the General Partner and Expense to the Limited Partners 107\u003c\/p\u003e \u003cp\u003eGeneralizing the Allocation Formula to Other Components of Income 108\u003c\/p\u003e \u003cp\u003eTax Basis of Partner’s Investment in a U.S. Partnership 109\u003c\/p\u003e \u003cp\u003eAccountants’ Terminology 113\u003c\/p\u003e \u003cp\u003eTax Allocations of Realized and Unrealized Income to Partners 113\u003c\/p\u003e \u003cp\u003eThe Tax Allocation Method of Layering 115\u003c\/p\u003e \u003cp\u003eTax Allocation of Interest 118\u003c\/p\u003e \u003cp\u003eTax-Exempt Interest Income, Line 18a 120\u003c\/p\u003e \u003cp\u003eSimilar Calculation for Tax Allocation of Dividends, Investment Expense, Foreign Tax Paid 121\u003c\/p\u003e \u003cp\u003eTax Allocation of Fixed Fees Paid by Limited Partners 121\u003c\/p\u003e \u003cp\u003eTax Allocation of Guaranteed Payments (of Fixed Fees) to the General Partner 122\u003c\/p\u003e \u003cp\u003eReporting Subcomponents of Interest Income and Dividends 122\u003c\/p\u003e \u003cp\u003eTax Consequences of Shorting 123\u003c\/p\u003e \u003cp\u003eShort Positions: Tax Treatment of Equity Dividends or Bond Coupons Claimed as Interest Expense 123\u003c\/p\u003e \u003cp\u003eDistributions from Partnerships Owned 124\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 \u003c\/b\u003e\u003cb\u003eTax Allocations of Realized Gains by Layering 127\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTax Allocation of Unrealized and Realized Capital Gains Using the Method of Layering 127\u003c\/p\u003e \u003cp\u003eIgnoring Ambiguity #1 with Layering 132\u003c\/p\u003e \u003cp\u003eWork-Around to Fix Ambiguity #2, the Fatal Flaw with Layering 133\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 \u003c\/b\u003e\u003cb\u003ePartial and Full Netting Methods 137\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Methods of Aggregation or Netting 137\u003c\/p\u003e \u003cp\u003ePartial Netting 138\u003c\/p\u003e \u003cp\u003eFull Netting 141\u003c\/p\u003e \u003cp\u003eMeasures of Book-Tax Disparity across Partners 142\u003c\/p\u003e \u003cp\u003eFormulating the Problem for Optimal Partner Tax Allocations under Full Netting 143\u003c\/p\u003e \u003cp\u003eFormulating the Problem for Optimal Partner Tax Allocations under Partial Netting 146\u003c\/p\u003e \u003cp\u003eSolving the Convex Optimization Problem of Tax Allocation 148\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 \u003c\/b\u003e\u003cb\u003eComparative Tax Consequences of Layering and Netting Methods 153\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhich Is the Better Method for Allocation of Realized Gains: Layering, Full Netting, or Partial Netting? 153\u003c\/p\u003e \u003cp\u003eLayering Examples Showing Earlier Tax Payment 154\u003c\/p\u003e \u003cp\u003eFull Netting Examples Showing Tax Postponement 158\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 \u003c\/b\u003e\u003cb\u003eTax Efficiency of Hedge Funds 161\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTax Efficiency Considerations for Offshore Hedge Funds 161\u003c\/p\u003e \u003cp\u003eTax Preference Ordering for U.S. Investors 163\u003c\/p\u003e \u003cp\u003eMore Attractive Tax Items to U.S. Investors 167\u003c\/p\u003e \u003cp\u003eLess Attractive Tax Items to U.S. Investors 169\u003c\/p\u003e \u003cp\u003eAn Exception: Special Tax Preference for Gains from U.S. Exchange-Traded Futures Contracts 170\u003c\/p\u003e \u003cp\u003eAmbiguities in Tax Preference 170\u003c\/p\u003e \u003cp\u003eTax Efficiency Steps for U.S. Hedge Funds 170\u003c\/p\u003e \u003cp\u003eA Structure for Tax-Exempt U.S. Entities to Recover Foreign Taxes 173\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 \u003c\/b\u003e\u003cb\u003eHedge Fund Performance and Risk Presentation 175\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePerformance Presentation: CFA Institute GIPS Verification 175\u003c\/p\u003e \u003cp\u003eCalculation of Hedge Fund Returns for Performance Presentation 179\u003c\/p\u003e \u003cp\u003eFacilitating Historical Risk and Return Review for Investors Using GIPS Guidelines 183\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 \u003c\/b\u003e\u003cb\u003eMutual Funds and Venture Funds Compared to Hedge Funds 191\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTax Return Filing of U.S. Partnerships Is an Involved Task 191\u003c\/p\u003e \u003cp\u003eComparison with Tax Allocations Made by Mutual Funds 191\u003c\/p\u003e \u003cp\u003eU.S. Venture Partnerships (Silicon Valley Venture Funds) 196\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 \u003c\/b\u003e\u003cb\u003eEpilogue 203\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEconomic Accounting Is a Common Denominator for U.S. and Offshore Funds 203\u003c\/p\u003e \u003cp\u003eTax Return Filing of U.S. Partnerships Is an Involved Task 204\u003c\/p\u003e \u003cp\u003eCalculating Partner Allocations Is Most of a U.S. Partnership’s Tax Accounting Effort 204\u003c\/p\u003e \u003cp\u003eLayering and Netting Methodologies for Tax Allocation of Capital Gains 205\u003c\/p\u003e \u003cp\u003eExample of Tax Allocation of Capital Gains by Full and Partial Netting in a 100-Partner Setting 205\u003c\/p\u003e \u003cp\u003eTilting Tax Allocations According to Tax Preferences 206\u003c\/p\u003e \u003cp\u003eThe Crown Jewel: Automated Tax Allocation of All Items of Income 206\u003c\/p\u003e \u003cp\u003eThe End of an Era of Layering 207\u003c\/p\u003e \u003cp\u003eAppendix 1 Excerpts of Key U.S. Statutes Discussed in Chapter 1 That Govern U.S. and Offshore Hedge Funds Venture Funds 209\u003c\/p\u003e \u003cp\u003eAppendix 2 Methodology and Implementation Example of Full Netting 229\u003c\/p\u003e \u003cp\u003eAppendix 3 Methodology and Implementation Example of Partial Netting 253\u003c\/p\u003e \u003cp\u003eAppendix 4 Nonabusive Tilting of Tax Allocations According to Tax Preferences 259\u003c\/p\u003e \u003cp\u003eAppendix 5 Eliminating Layering Entirely, by Allocating Dividends, Interest, Capital Gains, and Expenses in One Step 267\u003c\/p\u003e \u003cp\u003eIndex 277 \u003c\/p\u003e  \u003cp\u003e\u003cb\u003eNAVENDU P. VASAVADA, P\u003csmall\u003eH\u003c\/small\u003eD,\u003c\/b\u003e has held the positions of investment manager of large institutional investors, manager of private hedge funds, an economic analyst, and writer-at-large. He was formerly a senior investment manager at Aetna Inc. for over a decade, serving as head of quantitative research, risk manager, mortgage securities analyst, and equity\/fixed income derivatives quant. He holds a PhD from Wharton, preceded by an engineering MS from the University of Pennsylvania and PGDBA from IIM-A, India.   Unraveling the layers of complexity that intimidate managers and CFOs of hedge funds, \u003ci\u003eTaxation of U.S. Investment Partnerships and Hedge Funds\u003c\/i\u003e presents a lucid approach to formulating accounting policies for tax reporting. Over the last decade, hedge fund manager Navendu Vasavada has, with the help of accounting and legal professionals, created a road map to implement sound up-front accounting and tax policies that streamline the CFO and legal functions within a U.S. investment partnership.  \u003c\/p\u003e\u003cp\u003eAccessible and straightforward, \u003ci\u003eTaxation of U.S. Investment Partnerships and Hedge Funds\u003c\/i\u003e outlines hedge fund structure and looks at the nuances of accounting methodologies and policies for hedge funds. This comprehensive resource provides you with:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eGuidance on forming the hedge fund and drawing up the investment partnership agreement\u003c\/li\u003e \u003cli\u003eThe information to formulate accounting policies for tax reporting\u003c\/li\u003e \u003cli\u003eDetailed strategies for connecting all of the accounting efforts to produce accurate performance measures for presentation to investors\u003c\/li\u003e \u003cli\u003eAn understanding of the legal, accounting, and tax matters involved in hedge funds\u003c\/li\u003e \u003cli\u003eAlgorithms to automate tax allocations in U.S. partnerships\u003c\/li\u003e \u003cli\u003eApproaches to improve the tax efficiency of hedge funds\u003c\/li\u003e \u003cli\u003eInsight on organizing a typical offshore hedge fund\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eBy showing you how to set accounting, procedures and policies, report tax allocations, and performance presentation for U.S. investment partnerships and hedge funds, this book gives you all the practical information you need to understand the cryptic world of critical CFO functions and business models in hedge funds and investment partnerships.\u003c\/p\u003e  \u003cp\u003e\u003cb\u003eTAXATION OF U.S. INVESTMENT PARTNERSHIPS AND HEDGE FUNDS\u003c\/b\u003e ACCOUNTING POLICIES, TAX ALLOCATIONS, AND PERFORMANCE PRESENTATION \u003c\/p\u003e\u003cp\u003eUnraveling the layers of complexity that intimidate managers and CFOs of hedge funds, \u003ci\u003eTaxation of U.S. Investment Partnerships and Hedge Funds\u003c\/i\u003e presents a lucid approach to formulating accounting policies for tax reporting. Over the last decade, hedge fund manager Navendu Vasavada has, with the help of accounting and legal professionals, created a road map to implement sound up-front accounting and tax policies that streamline the CFO and legal functions within a U.S. investment partnership. \u003c\/p\u003e\u003cp\u003eAccessible and straightforward, \u003ci\u003eTaxation of U.S. Investment Partnerships and Hedge Funds\u003c\/i\u003e outlines hedge fund structure and looks at the nuances of accounting methodologies and policies for hedge funds. This comprehensive resource provides you with: \u003c\/p\u003e\u003cul\u003e \u003cli\u003eGuidance on forming the hedge fund and drawing up the investment partnership agreement\u003c\/li\u003e \u003cli\u003eThe information to formulate accounting policies for tax reporting\u003c\/li\u003e \u003cli\u003eDetailed strategies for connecting all of the accounting efforts to produce accurate   performance measures for presentation to investors\u003c\/li\u003e \u003cli\u003eAn understanding of the legal, accounting, and tax matters involved in hedge funds\u003c\/li\u003e \u003cli\u003eAlgorithms to automate tax allocations in U.S. partnerships\u003c\/li\u003e \u003cli\u003eApproaches to improve the tax effi ciency of hedge funds\u003c\/li\u003e \u003cli\u003eInsight on organizing a typical offshore hedge fund\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eBy showing you how to set accounting, procedures and policies, report tax allocations, and performance presentation for U.S. investment partnerships and hedge funds, this book gives you all the practical information you need to understand the cryptic world of critical CFO functions and business models in hedge funds and investment partnerships.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47990133620965,"sku":"NP9780470605752","price":94.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780470605752.jpg?v=1761786632","url":"https:\/\/k12savings.com\/products\/taxation-of-u-s-investment-partnerships-and-hedge-funds-isbn-9780470605752","provider":"K12savings","version":"1.0","type":"link"}