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I.R.S. Cracks Down on Hedge Fund Tax Strategy

nytimes.com

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Re: I.R.S. Cracks Down on Hedge Fund Tax Strategy

#131
post #127

Earlier quoted context omitted.

Getting involved with politics is a life-consuming activity, especially if you want to actually change anything. My state, unlike most in the US and unlike the US federal government, at least has a requirement that all tax issues must be voted on by the general public rather than just passed by the legislature and signed by the governor. The federal government, however, is the largest source of both taxes and onerous…

Yes, it is life-consuming. Anyone who wants to get into politics is getting into something that'll affect a lot of people's lives. It should take a lot of effort. If it were easy, our world (or the part of it that government touches, which is most of it) would be chaotic. As for "anyone who would want the job shouldn't have it," that's cute to some, but to me it's a tired thought-terminating cliche. It says "it's ok…

I'm well aware that I'm complaining about something that I'm unwilling to take the time to fix. Given all the time in the world, it's one of the problems on the list; it's just not at the top.

I don't, however, think it ought to take a life-consuming effort to make it stop affecting a lot of people's lives. But unfortunately, it probably will. Not least of which because there are a large number of people who feel entitled to make it affect a lot more of people's lives.

In any case, though, I'm surprised that you say "I don't get why more people don't do this!"; I think it's fairly obvious why more people don't do this. If it were the kind of thing you could spend a few hours doing as a volunteer effort and have an impact, rather than the kind of thing you could spend your life on and possibly accomplish nothing, then more people might do it. On the other hand, if it were that way, then there wouldn't be as much of a problem to deal with in the first place.

Re: I.R.S. Cracks Down on Hedge Fund Tax Strategy

#132
post #93
post #18

Earlier quoted context omitted.

I don't see how that is more artificial than taxing cap gains at a different rate than salary, or any number of other examples in the tax codes. All of these things are done to change the incentives about something, you can't expect them to be consistent without reference to those goals (and even then...)

really? I'm honestly confused at responding to this with downvoting.

I am confused as well. With that said, there is a comment from 'dragonwriter' further up in the thread that I think touches on this:

"In a tax system with progressive marginal rates on annual income, treating income resulting from action over multiple years as earned in the year realized results in a artificial increase in the tax burden on those with that kind of income pattern. So, there's a sense in which treating capital gains earned over multiple years differently than capital gains earned over a single year or less (the latter taxed as general income), given the progressive nature of the tax system."

Re: I.R.S. Cracks Down on Hedge Fund Tax Strategy

#133
post #93

Earlier quoted context omitted.

really? I'm honestly confused at responding to this with downvoting.

I am confused as well. With that said, there is a comment from 'dragonwriter' further up in the thread that I think touches on this: "In a tax system with progressive marginal rates on annual income, treating income resulting from action over multiple years as earned in the year realized results in a artificial increase in the tax burden on those with that kind of income pattern. So, there's a sense in which treating…

Well sure, one can argue with the goals of the policy (or if it is effective, or what the unintended consequences are), but these things are not "arbitrary", and tax codes are full of them.

Re: I.R.S. Cracks Down on Hedge Fund Tax Strategy

#135
post #40

Earlier quoted context omitted.

Actually the Medallion fund is only about $6 billion I believe. The rest of the money is managed in funds which are open to non-employees (and those ones don't make anything close to 35% annualised returns).

Do you know which funds are available to non-employees?

The ones I know of are

RIEF (Renaissance Institutional Equities Fund) RIDA (Renaissance Institutional Diversified Alpha) RIFF (Renaissance Institutional Futures Fund)

Of course there's probably still very large minimum investment thresholds.

Re: I.R.S. Cracks Down on Hedge Fund Tax Strategy

#136

Earlier quoted context omitted.

Or maybe they move the most successful trades from client's funds into this employee fund, and move the unsuccessful ones out to client's funds?

Oh, I like that one too, but how would they cover their asses in the event of an audit? Retroactive accounting?

If they can move ownership for a year, they'll certainly have no problems moving it for a few hundred milliseconds...

I think they'll probably use a database that's "eventually consistent" ;-) I

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