Non-negligible Undisclosed
Tax Risks are Real

Current GAAP pronouncements permit funds to operate the fund with undisclosed non- negligible tax risk.  The key strategy is acting ahead of the curve before these non-negligible risks materialize into NAV-destroying real tax risk.

Our Restructuring Solutions Work

Our restructuring programs are designed to quickly identify hidden tax risk by performing tax due diligence on the fund.  In the event risks are found, Logical Formulas recommends and helps to negotiate a restructured investment option.

Some forms of U.S. tax risk can approach a marginal tax rate of 55 percent of an offshore fund's returns -- plus interest -- plus potential penalties.  Combine  CONTINGENT TAX RISK with TAX RISK SHIFT and the remaining investors can wake up with a terrible headache.

Bernoulli Funds

Our web page also explains how an unscrupulous or uninformed fund manager might  gamble with tax risk audit probabilities in what we call a BERNOULLI FUND.  See the "True Risk Disclosure?" tab for information as to how this might happen.  Investors engage Logical Formulas to help them evaluate whether or not they might be invested in such a fund.

Fund managers do not necessarily need to be unscrupulous.  The IRS just recently initiated new hedge fund audit programs.  So the investor can have contingent tax risk just because the fund manage was not aware of the potential tax problem.

The interesting question is who pays the legal fees and the tax bill if and when the contingent risk materializes into real tax risk? 

• If you are a foreign investor, we can simplify the structure of your foreign direct inbound investment into the U.S.

• If you are a pension plan, foundation or other type of tax-exempt entity we design solutions to protect your investments.

• If you are a fund manager, we can minimize the chance you will ever have to confront your investors with contingent tax risks which materialize into actual tax risks.

Logical Formulas designs effective solutions to solve your contingent tax risk problems.

New Economic Conditions Demand Different Investment Solutions

Maybe now is the best time to redeem your investment in a fund?  Maybe shifting your investment to a managed account in the same fund strategy (but with better tax controls) is the best way to manage hidden tax risk?

Don't Be the Last Remaining Investor Left with Departed Investor Tax Risk -- Investors in Foreign Feeders are At Risk to this Issue

Tax-exempt investors and foreign investors are particularly vulnerable.

Imagine being the last remaining investor in a hedge fund or private equity fund ... and owning a disproportionately large share of an IRS tax audit bill which should belong to the previously redeemed investor.  Let us help you plan now to avoid such an unfortunate result -- before the tax audit problem actually occurs.

Now is the time to engage Logical Formulas to perform a due diligence and fund structure review of your investments.

Cost effective structuring solutions for all of your financial needs

Individual and corporate taxes

Jeff Lonsdale
Logical Formulas
4516 Lovers Lane #122
Dallas, TX 75225
(214) 769-3322
Jeff@logicalformulas.com