I really need to start a debate on the BassAckwards tax schemes in the U.S. Axe-grinding accountants who also sell entity formation kits need not reply. If an active pro trader is batching positions to a client/friend omnibus-acct tied to his/her master, I'm interested to hear how those sub-accounts are marking to market.
DEBATE QUESTION:
If a Registered Investment Advisor's sub-account client requests his/her account to be highly traded, how can this be set up so that the client doesn't create a tax burden? I suppose one way is to create a pass thru entity with a trading objective, but that's not very reasonable for 2 or 3 clients.
There are hedge funds which use quantitative models that require a high volume of trades whereby mark-to-market accounting is required. One accountant has told me that "Generally, managed accounts do not qualify for IRC 475, since another person is doing the trading." The 'other person' is the Advisor/Mgr. So are we to conclude that such trading models are only available to hedge fund customers? There has to be a simple solution. Qualified replies only please. Thank You.
DEBATE QUESTION:
If a Registered Investment Advisor's sub-account client requests his/her account to be highly traded, how can this be set up so that the client doesn't create a tax burden? I suppose one way is to create a pass thru entity with a trading objective, but that's not very reasonable for 2 or 3 clients.
There are hedge funds which use quantitative models that require a high volume of trades whereby mark-to-market accounting is required. One accountant has told me that "Generally, managed accounts do not qualify for IRC 475, since another person is doing the trading." The 'other person' is the Advisor/Mgr. So are we to conclude that such trading models are only available to hedge fund customers? There has to be a simple solution. Qualified replies only please. Thank You.
