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IRS flags tax-aware trading structures, including AQR Delphi Plus strategy
The IRS is planning further guidance and has highlighted certain currency transactions and combinations of equity swaps with futures as areas under review.
The US Internal Revenue Service has signaled a potential crackdown on tax-aware investment strategies that aim to generate losses to offset ordinary income, according to a report by Bloomberg.
The IRS said it plans to issue guidance and could take further action that would restrict certain transactions used by money managers to reduce clients' tax liabilities.
Bloomberg reports that the IRS specifically identified some currency transactions and structures combining equity swaps with futures as areas under review, putting the spotlight on strategies linked to AQR Capital Management.
One prominent example is AQR's Delphi Plus strategy, which Bloomberg says was used in the AQR TA Delphi Plus Fund that had approximately $6.6 billion in assets as of the middle of this year.