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IRS Guidance Facilitates Sovereign Wealth Fund Investment Into Private Equity Funds, But Issues Remain  


Author:  Steven D.  Bortnick.; Timothy J.  Leska.


Source: Volume 26, Number 03, January/February 2013 , pp.15-22(8)




Journal of Taxation and Regulation of Financial Institutions

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Abstract: 

Sovereign wealth funds generally are controlled entities of foreign governments and, as such, potentially are eligible for an exemption from U.S. tax on their investment income. However, this exemption can cease to apply if the funds engage in commercial activities. The IRS has proposed regulations intended to provide guidance on these issues. This article examines these rules as applied to sovereign wealth funds considering investing in private equity funds.

Keywords: sovereign wealth funds; IRC Section 892 exemption; controlled commercial entity; limited partner; private equity

Affiliations:  1: Pepper Hamilton LLP ; 2: Pepper Hamilton LLP .

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