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The Aftermath of YA Global: Who is a Partner?

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The Aftermath of YA Global: Who is a Partner?

The YA Global case has drawn widespread attention due to the U.S. tax implications for foreign investment partnerships investing in U.S. securities or making use of a U.S. investment manager. The I.R.S. prevailed in the U.S. Tax Court, and the foreign investment partnership was found to have been engaged in the conduct of a U.S. trade or business in the facts presented. The Tax Court has now released a follow-up memorandum opinion that addresses the following question: what standard should be applied when determining whether a foreign recipient of an income payment from a partnership should be recognized as a partner for income tax purposes and subject to Section 1446 withholding tax? At stake is the U.S. withholding tax imposed on partnerships with foreign partners and U.S. effectively connected income. Wooyoung Lee and Stanley C. Ruchelman address the issue. Sometimes, financial engineers develop a plan that works well when stress tested in the office, but is far too complicated for the I.R.S. and Tax Court judges.

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Tax 101: Is Crypto Growing Up?

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Tax 101: Is Crypto Growing Up?

Crypto assets are rarely out of the news these days, and the last months have been no exception. The well-publicized troubles of the FTX exchange have made crypto headline news again. Depending on one’s point of view, The FTX bankruptcy will underscore everything that some people think about the subject matter. Some will say the FTX bankruptcy is exactly what was to be expected and confirms the view that crypto assets are some sort of Ponzi scheme. Others will say this serves to justify the need for much greater regulation. And still others will point to the rise in the power of the exchanges, bemoaning that crypto was created to avoid powerful monopolies. Nonetheless, crypto and its technology are here to stay in the financial world. In his Tax 101 article, Gary Ashford, a Tax Partner (non-lawyer) of attorneys Harbottle & Lewis LLP, London, explains that (i) regulation of exchanges and service providers and (ii) taxation on a global basis are in the works. Will they effectively bring normalcy to a “wild west” asset? Readers should stay tuned.

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