Tax Services | Formidium

About our tax services

Formidium offers tailored tax services for diverse fund types, like Digital Asset, Hedge, Private Equity, Venture, and SPVs. Based in Downers Grove, IL, we serve a global clientele across 10+ countries. Trusted by 600+ funds, we provide top-tier tax support using cutting-edge Proprietary Tax Accounting & Allocation Technology. With licensed CPAs leading our team of 75+ professionals, we excel in automating tax calculations, reporting, and filings, including schedule K-1s for investors. Our technology streamlines data retrieval, cleaning, and reconciliation, ensuring accurate capital gains/loss calculations and precise tax lot accounting. At Formidium, we prioritize innovation and client service for unmatched results.

Formidium offers specialized tax services for U.S.-based funds, particularly partnerships like hedge funds. We combine investor data with income information for precise income allocation and tax calculations. We provide a full range of tax services , adept at simplifying complex tax calculations, reporting, and filings for various funds. Our strength lies in our technology and expertise in handling multi-currency, cryptocurrency, and global U.S.-based funds.

Review of private placement memorandum tax section.
Preparation of U.S. federal returns (1065, 1120, 1120-S), and state tax returns for all U.S. states, including handling composite tax returns, state filing fees, state tax withholdings, and other related tasks.
Preparation of all supporting and additional tax forms that are filed along with federal and state tax returns. (Form 8949, 4797, 8825, 8990, 8082, 8832-B, etc.)
Preparation of federal and state schedule K-1 reporting for investors.
Partner tax allocations using appropriate allocation methods.
Preparation and compliance with foreign investments. (Form 5471, 8865)
Preparation of international reporting tax forms K-2 and K-3.
Preparation of other miscellaneous forms like Form 1099s, name change, address change forms, and many more.
Preparation of responses to IRS and state revenue notices.
Offering and organizing cost amortization, book-to-tax reconciliations, maintaining tax basis for investor's capital and fund's investment, and handling the assignment of interest from one investor to another.
Tax lot level capital gain/loss calculations, wash sales calculation.
Carried interest reporting under IRC 1061.

All the items are covered for U.S. funds/entities.
Preparation of foreign partnerships, blocking corporations' tax returns, including foreign master-feeder structures.
Analysis of the entity's structure to determine its applicable U.S. tax filings. (Passive foreign investment company vs. controlled foreign corporation determination)
Filing applicable tax forms for non-U.S. funds/entities, including Form 8621, 5472 reporting.
Preparation of K-1 equivalent forms for non-U.S. entity/fund's investors, including PFIC/CFC reporting.

Tax specific services

Crypto Fund
Tax SPV
Tax Venture Fund
Tax Hedge Fund
Tax Private Equity Fund
Tax

We provide specialized tax services tailored to the requirements of crypto funds including analysis and tax adjustments for:

Contribution-in-kind and distribution-in-kind.
Wallet-to-wallet transfers.
Ordinary gain on staking and lending.
Receiving crypto from an airdrop, rewards, and mining income.

Crypto interest earnings from Defi lending.
Crypto earned from liquidity pools and interest-bearing
accounts etc.
Trading in coins, tokens, NFT, SAFE/SAFTs.

We provide specialized tax services tailored to the requirements of SPVs including analysis and tax adjustments for:

Schedule K-1 received from lower-tier SPV (including multiple upper-tier investments)
Waterfall distributions for tax allocation.
Committed capital structures.
Business interest expense limitations.
Qualified business income deduction.
Global intangible low-taxed income. (GILTI)
Foreign-derived intangible income. (FDII)

Carry rules under section 1061.
Qualified small business stock analysis under section 1202.
Itemized deductions and net operating losses.
Expensing/depreciation.
Effectively connected income and withholdings.
State source income apportionment factor calculation, state tax withholdings, etc.

Our tax services are tailored to venture funds, providing comprehensive analysis and customized tax adjustments in areas including:

Schedule K1 received from underlying venture investments.
Distribution waterfall for venture fund tax allocation.
Considerations for committed capital structures in venture funds.
Carry interest allocations and reporting as per IRC 1061.
Net investment income tax (NIIT) under IRC 1411 applicable on dividends, interest, and capital gains above certain thresholds.
Business interest expense limitations per IRC 163J.
Treatment of qualified business income according to IRC 199A.
Considerations for managing tax obligations upon exit or liquidation of investments.

Analysis of qualified small businesses stock under section 1202.
Reporting of recourse and non-recourse liability.
Global Intangible Low - Taxed Income. (GILTI)
Foreign-derived intangible income. (FDII)
Net operating losses and itemized deductions specific to venture funds.
Withholding requirements on effectively connected income and fixed, determinable, annual, and periodical income generated by venture funds.
Calculation of state source income apportionment factors and state tax withholdings.

We provide specialized tax services tailored to the requirements of hedge funds including analysis and tax adjustments for:

Incentive fee/Profit tax allocation, management fees allocation.
Recharacterization of Long-term capital gains ( carried interest ) as per section 1061.
Stuffing allocations for redeemed partners, aggregate allocation of trading income including Full netting and partial netting approach.
Calculation and allocation of business interest expense limitations as per section 163 J.
Qualified business income deduction.
Passive Activity Losses/At-Risk Limitations reporting's.
Section 475(f) mark to market allocation, section 1256 Contracts/Straddle/short sales rules/constructive sales adjustments and allocations
Footnotes and relevant disclosures on K-1s.
Reporting Dividend details i.e. Domestic vs Foreign, Section199-A, 897,1250, REIT dividend, capital gain distribution etc.
Handling PTP and Underlying Investment's K-1s.

Investor vs. Trader analysis and its implications.
Itemized deductions and net operating losses
Wash sales calculations
Reporting of Recourse and non recourse liability
Dividend expense adjustments as per section 263H.
Gross receipts calculations as per section 448.
Contribution and Distribution-in-kind adjustments
Handling and reporting cross border investments.
Preparing all the additional forms and schedules like Form 8865/8804/8805/8949/8990 etc.
Tax withholding and reporting for foreign investors.

Our tax services are tailored to venture funds, providing comprehensive analysis and customized tax adjustments in areas including:

Schedule K1 received from underlying venture investments.
Distribution waterfall for private equity fund tax allocation.
Considerations for committed capital structures in venture funds.
Carry interest allocations and reporting as per IRC 1061.
Net investment income tax (NIIT) under IRC 1411 applicable on dividends, interest, and capital gains above certain thresholds.
Business interest expense limitations per IRC 163J.
Treatment of qualified business income according to IRC 199A.
Considerations for managing tax obligations upon exit or liquidation of investments.

Analysis of qualified small businesses stock under section 1202.
Reporting of recourse and non-recourse liability.
Global Intangible Low - Taxed Income. (GILTI)
Foreign-derived intangible income. (FDII)
Net operating losses and itemized deductions specific to venture funds.
Withholding requirements on effectively connected income and fixed, determinable, annual, and periodical income generated by venture funds.
Calculation of state source income apportionment factors and state tax withholdings.