How are feeder funds taxed?

While a master fund is typically an offshore operation, it can choose to be taxed as a partnership for U.S. taxation purposes. By doing so, an onshore feeder fund will receive pass-through tax treatment for the master fund’s profits and losses, thereby avoiding the double taxation that affects most corporate profits.

How are feeder funds taxed in India?

Tax benefits of investing in Franklin India Feeder Franklin US Opportunities Fund. A Short-term capital gain tax is applicable as per the income tax slab if sold before 36 months. If the investments are redeemed after 36 months, a long-term capital gain tax of 20% with indexation is levied.

How does a feeder fund work?

A feeder fund (“Feeder”) is an investment vehicle, often a limited partnership, that pools capital commitments of investors and invests or “feeds” such capital into an umbrella fund, often called a master fund (“Master”), which directs and oversees all investments held in the Master portfolio.

Do offshore hedge funds pay taxes?

The UBTI tax is avoided by investing in an offshore hedge fund. Although certain organisations, such as qualified retirement plans, generally are exempt from federal income tax, (UBTI) passed through partnerships to tax-exempt partners is subject to that tax.

How are feeder funds taxed in the US?

If, however, an offshore master fund elects to be taxed as a partnership or limited liability company (LLC) for U.S. tax purposes, then onshore feeder funds receive pass-through treatment of their share of the master fund’s gains or losses, thus avoiding double taxation.

Can a closed end fund use an incubator?

Closed-end funds, including real estate funds, venture capital, and private equity funds rarely use an incubator fund to build performance records, given that a closed-end fund cannot accept ongoing investments and requires several years to obtain performance returns.

Why are there so many incubators in China?

Another reason entrepreneurs are joining K-tech is because it enables them to apply for China’s new “entrepreneur visa”, for which K-tech is providing full support. Private incubators work with the government, in order to assure a smooth landing procedure (visa, tax and document declaration, internet access etc.).

What makes a master feeder fund a feeder fund?

A common master-feeder structure involves an offshore master fund with two feeder funds, one U.S.-based and one non-U.S. based, in order to allow the master fund to accept investments from both tax-exempt and U.S.-taxable investors.