Tax Concerns
For a U.S. taxable investor, the ownership of shares in what is known as a "passive foreign investment company" or PFIC can prove to be a very expensive proposition. The offshore feeder fund will almost always meet the definition of a PFIC, but the master fund will not, so the transaction is set up so that the master fund is a partnership for U.S. tax purposes, which makes it an effective insulation between the US based investor and that PFIC feeder.
Read more about this topic: Master-feeder
Famous quotes containing the words tax and/or concerns:
“...many tax collectors and sinners were also sitting with Jesus.”
—Bible: New Testament, Mark 2:15.
“American thinking, when it concerns itself with beautiful letters as when it concerns itself with religious dogma or political theory, is extraordinarily timid and superficial ... [I]t evades the genuinely serious problems of art and life as if they were stringently taboo ... [T]he outward virtues it undoubtedly shows are always the virtues, not of profundity, not of courage, not of originality, but merely those of an emasculated and often very trashy dilettantism.”
—H.L. (Henry Lewis)