In conjunction with the other provisions of the Bankruptcy Code that require a disclosure statement and plan to provide “adequate information” for a claim or interest holder to make an informed judgment about the plan, Section 1123(b)(3) effectively provides notice to creditors of retention and prospective enforcement of claims that may enlarge the estate’s assets for distribution.
A plan must expressly retain claims to preserve a liquidating trust’s standing to pursue them after plan confirmation.
Hedge funds often include offshore entities, especially foreign corporations, in their structures to accommodate foreign investors and domestic tax-exempt entities. This article discusses one of these reporting requirements, U. For the transfer to be exempt from reporting on Form 926, the income from the contribution to the foreign corporation must not be unrelated business income.
investors that invest in hedge funds through foreign corporations and hedge funds that establish foreign corporations must be diligent to ensure that they meet the special reporting and filing requirements that frequently arise when investing in or forming foreign corporations. Generally, the transferor does not need to file Form 926 if the contribution of stock or securities was taxable in the U. and the transferor properly reported the income on a timely filed federal income tax return. Of particular note to certain pension funds and university endowments that invest in hedge funds through foreign corporations, certain contributions by tax-exempt entities including transfers of stock and securities are eligible for an exemption from filing Form 926.
In the ruling, a corporate taxpayer had been incorporated in a state on a particular date, let’s say January 19, 2007.
The company was “administratively dissolved” some time after, for example, effective January 25, 2008, due to its failure to timely pay state franchise taxes.
The 0,000 threshold for reporting cash contributions to foreign corporations may not provide relief for many investors in hedge funds since the initial investment into a hedge find is routinely greater than 0,000.If tax is required to be withheld with respect to a transfer of property in accordance with the rules of this section, then no additional tax is required to be withheld by the transferee of the property with respect to that transfer pursuant to the general rules of section 1445(a) and § 1.1445-1. real property interest described in section 1445(e) is exempt from withholding under the rules of this section, then no withholding is required under the general rules of section 1445(a) and § 1.1445-1.For rules coordinating the withholding under section 1441 (or section 1442 or 1443) and under section 1445 on distributions from a corporation, see § 1.1441-3(b)(4). By reason of the operation of a nonrecognition provision of the Internal Revenue Code or the provisions of any treaty of the United States no gain or loss is required to be recognized by the foreign person with respect to which withholding would otherwise be required; and The entity or fiduciary that is otherwise required to withhold complies with the notice requirements of paragraph (b)(2)(ii) of this section.Company management, however, was blissfully unaware of this development and continued to file the business’s federal corporate income tax return and pay all federal income taxes.Eventually, company officers learned of their plight and reincorporated the business in the same state. tax-exempt entities are also subject to this filing requirement. To minimize filing requirements and the imposition of penalties, the IRS relaxed the Form 926 filing requirements for cash contributions to foreign corporations that would otherwise be reportable.