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Venture Fund Tax

Venture Fund Tax is part of Formidium's tax services group. We offer a full suite of tax services to solve any complexities and challenges in tax calculations, reporting, and filings for venture and private equity funds. We offer our all-inclusive tax services to a vast network of managers and funds located globally.

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Workflow for Investment Fund
Year-End Tax Returns

This video illustrates the workflow for Investment Fund Year-End Tax Returns, the process follows the execution of a service engagement between our clients and us, and concludes upon the submission of tax returns to the relevant tax authorities, including forms like 1065, 1040, 1120, and 1120-S. Additionally, we ensure the distribution of tax statements to Investors and vendors, such as Schedule K-1, Form 1099, and 1042-S.









Why Venture Fund Tax?

Venture Fund Tax is part of Formidium's tax services group. We are located in Downers Grove, IL serving the tax reporting needs of over 600+ Funds and have licensed CPAs leading our tax practice. We offer our all-inclusive tax services to a vast network of managers and funds globally, covering asset classes like venture investments/funds, real estate, private equity, and other closed ended funds investing in illiquid assets. Our experienced and qualified service team of 75+ individuals takes care of tax filings and reporting of scheduled K-1s for your investors.

Using our Proprietary Tax Accounting & Allocation Technology, Seamless Tax, our tax specialists provide you with industry-leading tax support coupled with the highest level of client service, because cutting-edge technology and high-touch client service are at the core of everything we do.

Services We Offer

We provide comprehensive tax services across Venture Fund Tax entire lifecycle, as described below:

  • Review of private placement memorandum tax section.
  • Preparation of U.S. federal returns (1065, 1120, 1120-S) and state tax returns for all U.S. states, including composite tax returns, handling state filing fees, etc.
  • Preparation of all supporting and additional tax forms that are filed along with federal and state tax returns. (Form 8949, 4797, 8825, 8990, 8082, 8832-B, etc.)
  • Preparation of federal and state schedule K-1 reporting for investor.
  • Partner tax allocations using appropriate allocation methods.
  • Preparation and compliance with foreign investments. (Form 5471, 8865)
  • U.S. tax reporting and compliance for Non-U.S. investors. (Form 1042, 8804, 8805)
  • Preparation of international reporting tax forms K-2 and K-3.
  • Preparation of other miscellaneous forms like Form 1099s, name change, address change forms, and many more.
  • Preparation of responses to IRS and state revenue notices.
  • Offering and organizing cost amortization, book-to-tax reconciliations, maintaining tax basis for investors' capital and Venture Fund Tax investment, and handling the assignment of interest from one investor to another.
  • Tax lot level capital gain/loss calculations, wash sales calculation.
  • Unrelated business taxable income (UBTI).

We provide comprehensive tax services across Venture Fund Tax entire lifecycle, as described below:

  • All the items covered for U.S. Venture Fund Tax.
  • Preparation of foreign partnerships and blocker corporations' tax returns, including foreign master-feeder structures.
  • Analysis of Venture Fund Tax structure to determine its applicable U.S. tax filings. (Passive foreign investment company vs. controlled foreign corporation determination)
  • Filing applicable tax forms for non-U.S. Venture Fund Tax, including Form 8621, 5472 reporting.
  • Preparation of K-1 equivalent forms for Non-U.S. Venture Fund Tax investors, including PFIC/CFC reporting.

Our tax services are tailored to venture funds, providing comprehensive analysis and customized tax adjustments in areas including:

  • Schedule K1 received from underlying venture investments.
  • Distribution waterfall for venture fund tax allocation.
  • Considerations for committed capital structures in venture funds.
  • Carry interest allocations and reporting as per IRC 1061.
  • Net investment income tax (NIIT) under IRC 1411 applicable on dividends, interest, and capital gains above certain thresholds.
  • Business interest expense limitations per IRC 163J.
  • Treatment of qualified business income according to IRC 199A.
  • Considerations for managing tax obligations upon exit or liquidation of investments.
  • Analysis of qualified small businesses stock under section 1202.
  • Reporting of recourse and non-recourse liability.
  • Global Intangible Low - Taxed Income. (GILTI)
  • Foreign-derived intangible income. (FDII)
  • Net operating losses and itemized deductions specific to venture funds.
  • Withholding requirements on effectively connected income and fixed, determinable, annual, and periodical income generated by venture funds.
  • Calculation of state source income apportionment factors and state tax withholdings.

Seamless Tax

Seamless Tax is our proprietary tax accounting and allocation technology, a part of our flagship fund accounting software, SeamlessTM. The tax accounting and allocations technology redefines and streamlines the process of calculation & allocation of capital gain/other incomes/expenses, federal/state returns preparation, tax schedules such as K1s, and informational returns such as 1099s and 1042s for Venture asset funds. This tax accounting and allocation technology enables tax professionals and practitioners to spend more time on tax data analysis and handling complex tax matters.

Seamless Tax can handle complex allocations & waterfall calculations, allocation of tax numbers received on K1/1099 received from underlying passthrough investment, generates fund level taxable income/loss numbers and investor level tax numbers after different adjustments as per the tax provisions. It can generate a lot wise capital gain (loss) report with bifurcation of gain (loss) in short/long term.

Seamless Tax ensures that all investor-level tax allocations are calculated efficiently and books vs. tax adjustments are tracked & reconciled. It has good quality controls which ensures efficient and accurate processing of tax returns, K-1s,1099s, and other tax schedules required by US tax returns for investment funds.

Client Testimonial

"Hear what Rob Topping, has to say about his experience with our tax returns services"

Rob Topping

Founder and Managing Member - Topping Capital

Client Testimonial

"Hear what Sharad Daswani, has to say about his experience with our tax returns services"

Sharad Daswani

Founding Member - Spru Crew Investor Circle

Client Testimonial

"Hear what Indra Chandra, has to say about his experience with our tax returns services"

Indra Chandra

CFA Managing Member - CIG Spectrum Capital, LLC