Donated interests in hedge funds and private equity firms

Author: Carolyn A. Reers Publication | October 1, 2017
Published in: Trusts & Estates Magazine

Handled properly, hedge fund and private equity fund interests can play an important role in achieving maximum income tax benefits for principals and their families. If you have clients who are principals of hedge funds and private equity firms, they face some steep obstacles to receiving full income tax charitable deduction for donations of interests in their companies.

Fortunately there's a simple solution: a donor-advised fund (DAF). Be warned, though, that charities that sponsor and administer DAFs don't always accept donations of fund interests.

Under US law, giving to a DAF allows the principal to:

  • Receive an income tax charitable deduction at the highest level available for fund interests; and
  • Have the deduction based on the fair market value (FMV) of the fund interest (rather than the principal's cost basis) at the time of the gift.
Read the full article: Donated interests in hedge funds and private equity firm

This article was originally published in Trusts & Estates Magazine


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Carolyn A. Reers

Carolyn A. Reers

New York