Foreign Partnership Owes US Taxes Over Asset Manager Earnings

A Cayman Islands-based partnership that used a US financial adviser to manage its business deals owes at least $44 million in taxes stemming from earnings because its relationship with the adviser demonstrated taxable engagement in a US business, the Tax Court held.

YA Global Investments LP, a partnership that funded portfolio companies in exchange for stocks, instructed New Jersey investment management firm Yorkville Advisors on managing its assets from 2006 to 2008. This relationship made Yorkville’s activities attributable to YA Global for US tax purposes, the US Tax Court said in an opinion Wednesday. The IRS issued a ...