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.
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I presume your $100K bonus that should have been taxed as income tax was deferred and the $100K profits are taxed as capital gains.
yeah that's what I'm thinking too. would be way too good to be true I guess.
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