Basic Structure: U.S. Domestic Fund
A private equity or hedge fund located in the United States will typically be structured as a limited partnership, due to the lack of an entity-level tax on partnerships and other flow-through entities under the U.S. tax system. The limited partners will be the institutional and individual investors. The general partner will be an affiliate of the manager of the fund. Typically, the manager of the hedge fund is compensated with a fee based on 2% of the gross assets of the fund, and a profits interest entitling the manager (or, more typically, its affiliated general partner) to 20% of the fund's return (subject, in many cases, to minimum guaranteed returns for the limited partners).
Read more about this topic: Taxation Of Private Equity And Hedge Funds
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