Logical Formulas
Dividend Abuse Risk

U.S. Tax-Exempt Investors Sometimes
 
Unaware of Fund's Tax Positions


Often as U.S tax-exempt investors, pension plans and university endowments are completely unaware of certain U.S. tax risks believing they are protected by the U.S. Passive Foreign Investment Company (PFIC) regime when they invest in foreign entities and foreign feeders.  This belief might not be completely true.  Foreign investors have similar issues. As a group, these investors may not be aware that pre-existing "fund specific" tax risk can be inherited by simply subscribing to a PROBLEM FUND. 

The recent U.S. Senate Investigations point out an example of how a fund manager might turn dividend income into a possible tax problem for the unspecting investor:

Dividend Tax Abuse: How Offshore Entities Dodge Taxes On U.S. Stock Dividends

Paste this link in your browser: 
 

http://hsgac.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=a107e677-97ce-49db-a769-beb8d6d79faa.

 

 

 

 

 

 

 

 

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