Effectively Connected Income: A Close Look At The Rules

Law360, New York (September 11, 2015, 11:45 AM EDT) -- Short of a tornado or a cataclysmic earthquake obliterating midtown Manhattan or Greenwich, Connecticut, there is little that offshore fund managers fear more than the specter of their funds being treated as engaged in a United States trade or business. This fear is well-grounded; the incremental tax that results from this treatment may exceed 50 percent. This article outlines how a fund can remain "in bounds," without running afoul of the rules that can cause this expense. It ends with certain suggestions for structuring and best practices.

The Securities and Commodities Safe Harbor

Funds that trade on the U.S. capital markets...

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