BDO Knows Financial Services Alert - November 2014
If you are a service provider, such as a hedge fund manager, you probably felt the effects of 457A. In 2008, the IRS enacted section 475A to promote uniformity in tax treatments between U.S. companies and offshore companies based in tax haven jurisdictions. Specifically, the legislation was developed to address the treatment of nonqualified deferred compensation plans. The ruling effectively precludes U.S. hedge fund managers from deferring taxes on compensation paid by offshore funds located in tax havens.