Pension plans and other tax-exempt organizations would be permitted to invest directly in U.S. hedge funds without being subject to unrelated business income tax under legislation Rep. Sander Levin, D-Mich., plans to introduce, according to a news release from the congressman’s office. Currently, pension plan investments in U.S.-based hedge funds are placed in an offshore affiliate, or “blocker organization,” of the hedge fund to enable a pension plan to avoid having to pay UBIT on the investment returns.
“There is no reason to force tax-exempt entities offshore when they invest in hedge funds,” Mr. Levin said in the release.
