The Tax, Ma’am; Just the Tax

Tax avoidance is having a moment, and this practice note highlights methods developed by the private equity industry to structure around adverse tax consequences. There is no “one-size-fits-all” approach to fund formation—funds often are comprised of multiple entities that invest side by side in the same investment or are formed to hold entirely different types of investments. The goal in structuring an investment product is to achieve the most efficient and cost-effective framework, given the form of management, investor base, and portfolio content, while concurrently paying the minimum tax at all levels. The most tax-efficient structure can often be the most administratively burdensome choice, however, so a balance must be struck between ensuring maximum business and tax efficiencies.
 
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