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Excess business holdings: How much is too much?

In a recent article in Private Funds Management, Dahlia Doumar and Carl Merino discuss planning opportunities and challenges faced by private equity managers who are considering a donation of their carry or their stake in a management company to a donor-advised fund.  For many managers, equity in a fund or its GP or management company may be the most substantial asset available to fund long-term philanthropic goals.  However, because GPs and management companies may be active business enterprises for excise tax purposes, the transfer of a large interest in a GP or management company to a DAF potentially can give rise to excess business holdings tax.  In some cases an LP interest in the underlying fund might be a more suitable asset to contribute. The article touches on key issues potential donors should consider before making such a donation.

To read Dahlia Doumar and Carl Merino’s article, please click here.