When Do a Foreign Fund’s Lending & Underwriting Activities Constitute a U.S. Trade or Business?
In Chief Counsel Advice 201501013, the IRS determined that a foreign fund was engaged in a U.S. trade or business ("ETBUS") based on lending and underwriting activities conducted on the fund's behalf by a U.S. resident fund manager under a management agreement. The IRS attributed the manager's activities to the fund, for purposes of the ETBUS analysis, finding the activities to be "considerable, continuous, and regular." The CCA further concluded that the foreign fund's activities did not qualify for the "trading safe harbors" under Section 864, exploring the fine distinction between "traders" [...]Read more