Question for people in REPE who are familiar with fund co-invest:
Say you defer part of your bonus (assume $100k for simplicity) and use that to co-invest in your closed-ended fund.
Fast forward 7-10 years. Your fund did a 2x so you are taking $200k out.
Do you pay income taxes on $100k return OF capital + cap gains on the $100k return ON capital?
Or do you pay just cap gains on all $200k?
Trying to think if there's some kind of tax benefit to doing something like this.