Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Robert Loewy

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IRS Issues New Partnership Audit Procedures

Posted in Private Investment Funds - Tax
Included as a revenue offset in the budget legislation (H.R. 1314) signed by President Obama are provisions that simplify the procedure for the Internal Revenue Service to audit and collect adjustments from partnerships. The new rules, which are generally effective beginning 2018, permit the IRS to send the bill for a prior year’s tax deficiency… Continue Reading

SEC Proposes Liquidity Management Rules for Mutual Funds and ETFs

Posted in Investment Companies and Investment Advisers
On September 22, the Securities and Exchange Commission proposed a comprehensive package of rule reforms designed to enhance effective liquidity risk management by open-end funds, including mutual funds and exchange-traded funds (ETFs). Under the proposal, mutual funds and ETFs would be required to implement liquidity risk management programs and enhance disclosure regarding fund liquidity and… Continue Reading

IRS Addresses RIC Asset Diversification Requirements

Posted in Investment Companies and Investment Advisers
On September 14, the Internal Revenue Service (IRS) issued final regulations under Internal Revenue Code Section 851 clarifying that control groups under the regulated investment company (RIC) rules may consist of two entities (i.e., the RIC and one subsidiary), rather than two levels of entities, settling a decades-long debate. The IRS also issued Rev. Proc.… Continue Reading

Due Date for FATCA Reporting of US Accounts Is Approaching

Posted in Tax
The deadline to report US accounts by offshore funds that are organized in Model 2 Intergovernmental Agreement (IGA) jurisdictions, such as Bermuda, as required by Foreign Account Tax Compliance Act (FATCA), is quickly approaching. The first report by such funds on IRS Form 8966 is due by March 31. However, an automatic 90-day extension is… Continue Reading

SEC Sanctions Operator of Unregistered Virtual Currency Exchanges

Posted in Digital Assets and Virtual Currencies
On December 8, the Securities and Exchange Commission sanctioned a computer programmer for operating two online exchanges that traded securities using virtual currencies without registering them as broker-dealers or stock exchanges. The programmer, Ethan Burnside, operated the two exchanges through his company, BTC Trading Corp., from August 2012 to October 2013. Account holders were able… Continue Reading

NYS Department of Taxation and Finance Issues Tax Guidance on Virtual Currency Transactions

Posted in Digital Assets and Virtual Currencies
On December 5, the New York State Department of Taxation and Finance (DTF) issued the memorandum “Tax Department Policy on Transactions Using Convertible Virtual Currency.” The memorandum clarified that under New York law, convertible virtual currency (such as bitcoin) is considered “intangible property,” which is not subject to sales tax. Therefore, the purchase or sale… Continue Reading

FATCA Transitional Relief and Extension of Time for the Implementation of New Account Procedures for Entity Investors

Posted in Private Investment Funds
On May 2, the Internal Revenue Service issued a notice (Notice 2014-33) providing for a transition period for enforcing the withholding rules of the Foreign Account Tax Compliance Act (FATCA) and extending the period by which investment funds need to have FATCA procedures in place for entity investors. Pursuant to the notice: Years 2014 and… Continue Reading

Cayman Islands to Enter into a Model 1 IGA

Posted in Private Investment Funds
The Cayman Islands announced on March 15 that it intends to enter into a Model 1 Intergovernmental Agreement (IGA) with the Internal Revenue Service for Foreign Account Tax Compliance Act (FATCA) compliance purposes. Accordingly, hedge funds and private equity funds that operate in the Cayman Islands will not have to enter into FATCA agreements with… Continue Reading

FATCA Regulations Are Finalized

Posted in Private Investment Funds
On January 18, the Treasury Department issued final regulations under the Foreign Account Tax Compliance Act (FATCA). The final regulations incorporate the FATCA guidance that the Internal Revenue Service (IRS) has issued since proposed FATCA regulations were issued last February, as well as certain comments received regarding the proposed FATCA regulations.… Continue Reading

IRS Delays Implementation of FATCA Tax Reporting Rules

Posted in Private Investment Funds
The Internal Revenue Service this week released Announcement 2012-42 (the Announcement), which postpones until 2014 the need for foreign hedge funds and private equity funds to request Foreign Account Tax Compliance Act (FATCA) information and documentation from their investors. In effect, the IRS has delayed implementation of the FATCA tax reporting rules until 2014. The… Continue Reading