Question 2 -- Form 1065 Schedule K-1 -- Partner's share of profit, loss, and capital

Discussion in 'Tax' started by franklin28@hushmail.com, Mar 7, 2005.

  1. Guest

    Assume a hedge fund's limited partner's pay 20% of annual
    profits as an inventive fee. Further assume that the fund
    has two investors, Partner X with 75% interest and Partner Y
    with 25% interest.)

    On Form 1065 Schedule K-1, Part II, Item L (Partner's share
    of profit, loss, and capital)

    Partner X and Y's shares of losses are 75% and 25%
    respectively , and Partner X and Y's shares of capital are
    75% and 25% respectively. What are Partner X and Y's shares
    of profits? Would they be 75% and 25%, or would they be 60%
    and 20% (in other words, taking the 20% incentive fee which
    would have been paid had there been profits)?

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    , Mar 7, 2005
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