HAS ANYONE ENCOUNTERED NEW VENTURE PITFALLS TO SHARE WITH US?

Everyone - As part of an upcoming seminar I’m presenting to Kellogg, listed below are some tax and structure pitfalls associated with a new venture. If you’ve encountered others you’d like to share, I’d love to hear about those. I'm happy to send you the final presentation. Best regards, Bill Wiersema

• Elect 83(b) within 30 days of being awarded a carried interest. Otherwise, the triggering of the holding period for capital gains is lost. • Plan for the new carried interest holding period for long-term capital gain: Starting in 2018, it has been lengthened from one to three years.
• Waive fees only to create profits interests. Capital interests, on the other hand, are immediately taxed. • Beware of carried interest distributions from early success. These may not be allowed under the agreement, or subject to claw back. • Choose the right entities for the fund holding company and its portfolio company subsidiaries. Switching later can be costly.



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