US Tax Changes for Deferred Hedge Fund Compensation
The US tax treatment of deferred compensation of offshore alternative investment funds is changing based on Section 457A of the Emergency Economic Stabilization Act of 2008 (H.R. 1424). Consequently, managers who earned deferred compensation for services performed before 2009 must repatriate it to the US no later than December 31, 2017. A donor-advised fund could be a valuable tool for hedge fund managers planning for this one-time income event.
- A donor-advised fund can be used to make grants to charities over time.
- NPT-UK may accept an interest in an alternative investment as a charitable contribution and retain an investment in the fund where the donor is a principal or manager. NPT-UK will conduct due diligence to make this determination. The donor may not receive a private benefit from any gift.
- Donor-advised funds are subject to different rules and fewer restrictions than US private foundations under US tax rules.
NPT-UK is a charity and does not provide legal or tax advice. Donors should consult with their tax and legal advisors before making a charitable contribution