![]() The management company almost always shares at least partial common ownership with the general partner. ![]() The management company is often delegated authority by the general partner entity to conduct the day- to- day operations of the investment partnership in exchange for a management fee but is formally separate from the general partner. 162? Many investment funds employ a management company that clearly qualifies as being engaged in a trade or business. One may wonder: Can fund- related expenses be deducted under Sec. The TCJA, however, eliminated miscellaneous itemized deductions for tax years 2018 through 2025. Before the TCJA's passage, individuals could deduct these expenses as miscellaneous itemized deductions, subject to a floor of 2% of the individual's adjusted gross income (AGI). 212, the advisory fees and other investment expenses of the fund are now no longer deductible to fund investors that are individuals or similarly taxed entities, such as trusts. 212 expenses (sometimes referred to as portfolio deductions). 115- 97, made it less desirable to classify advisory fees and other investment expenses as Sec. The law known as the Tax Cuts and Jobs Act (TCJA), P.L. This discussion addresses instances in which the characterization of a general partner's activity may become relevant, and it outlines the authority to consider when determining whether the general partner of an investment fund is engaged in a Sec. ![]() In fact, it is common practice to treat them otherwise. Those not familiar with the industry might find it interesting that these entities are generally not treated as engaged in a Sec. That general partner is responsible for the overall management of the fund and is usually compensated by a performance fee or allocation (sometimes called a carried interest) in exchange for services rendered.
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