How is my investment treated for tax purposes?
Your investment in an IPOGO fund would be taxed like any other fund investment. Our LLC funds are taxed as partnerships, meaning that the fund’s gains and losses would pass through to its investors. Generally, if an investment is held for more than one year before its disposition, any income resulting from that investment would be taxed at the long term capital gains rate. The United States tax code allows certain types of entities to utilize pass-through taxation. This effectively shifts the income tax liability from the entity earning the income to those who have a beneficial interest in it. The Schedule K-1 is the form that reports the amounts that are passed through to each party that has an interest in the entity.
A K-1 will be issued only when there is a taxable event. This means that unless there was a change of control or distribution of exit proceeds during the tax year, there will not be a K-1 for that fund.
K-1s will only be issued for you if the following cases occurred during the tax year:
- You’re invested in a diversified managed fund (e.g. Late Stage Fund, IPOGO Growth Opportunity Fund II, III or IV)
- A fund you’re invested in has a taxable event (e.g. M&A proceeds, IPO)
- A fund you’re invested in has a change of ownership:
- A member transfers their allocation to another of their entities (IPOGO transfer)
- A member sells their allocation of the fund to another investor on IPOGO (IPOGO secondary)
Note: we are not tax experts and have provided this discussion for informational purposes only and not as personal tax advice. You should consult your tax advisors for guidance specific to your circumstances.
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