Are there any tax efficient ways to roll acquisition fees paid at close into equity, without paying ordinary income? Is there a structure or way to assign equity without it being counted as income?
| +38 | Being a 100% Disabled Military Vet Pays as Much as RE Analyst Seat | 30 | 9h |
| +21 | Rate Hikes | 14 | 1d |
| +16 | Senior Living Modeling Help | 5 | 4d |
| +9 | What are the best undergrad schools for placing in real estate finance? | 16 | 1d |
| +9 | REPE Analyst Firm Advice | 3 | 1d |
| +9 | Launching a Development Platform in Greece | 2 | 6m |
| +8 | Hard Money Lenders? | 1 | 20h |
| +3 | BGO REPE LDN | 1 | 5d |
| +3 | LIHTC Syndicator Comp | 1 | 4d |
| +2 | Question on being paid a fee for bringing a developer a site | 3 | 18h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
There is one way I can think of, but it is not so clean. Say your acquisition fee is $1M. You could create a new class of units with a nominal value in the LP (1 class B unit at $10) that would mimic the economics of the units holders that are putting real cash equity. Essentially a carried interest… say the class A unit holders are expected to double their money in 5 years then you would expect your B unit to be worth $2M.
In this case you would not get any distributions or depreciation benefits though, correct?
Aliquam in vero mollitia facilis eligendi. Neque alias aspernatur harum officia quos molestias. Magni aut et est unde ut tenetur quibusdam.
Aspernatur qui iusto veritatis unde. Illo illo doloribus ullam omnis et illo amet. Culpa quod dignissimos laborum quis nobis excepturi omnis.
Autem dignissimos sit a fugit eos explicabo dolore. Non atque sed voluptas animi temporibus ut in. Alias quia et est voluptas maxime fugiat quibusdam. Ut voluptatibus et dicta nihil. Alias natus nemo voluptas deserunt voluptatem expedita.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...