These Hedge Fund Trades Can Escape New Carried Interest Limits
- Trump tax law only allows break if assets held for three years
- Regulated futures contracts don’t have to meet holding period
A man walks past the Internal Revenue Service headquarters in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The Internal Revenue Service knocked down one way for hedge fund managers to dodge restrictions in President Donald Trump’s tax law. But for some managers, there’s still a way out.
New limits on carried interest profits don’t apply to regulated futures contracts or contracts to trade foreign currencies. For managers who rely heavily on those strategies, a chunk of their assets can continue to be taxed at a much lower rate, even if they don’t hold them for three years as the law requires.