Formidium | Tax Services for Alternative Investments

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 the private placement memorandum tax section.
Preparation of U.S. federal tax returns (Forms 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 filed with federal and state tax returns (Forms 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 for foreign investments (Forms 5471, 8865).
Preparation of international reporting tax forms K-2 and K-3.
Preparation of other miscellaneous forms, such as Form 1099s, name change forms, and address change forms.
Preparation of responses to IRS and state revenue notices.
Offering and organizing cost amortization, book-to-tax reconciliations, maintaining tax basis for investors' capital and fund investments, and handling the assignment of interest from one investor to another.
Tax lot-level capital gain/loss calculations and wash sales calculations.
Carried interest reporting under IRC Section 1061.

All relevant items are covered for U.S. funds and entities.
Preparation of tax returns for foreign partnerships and blocking corporations, including foreign master-feeder structures.
Analysis of the entity's structure to determine applicable U.S. tax filings (e.g., Passive Foreign Investment Company vs. Controlled Foreign Corporation determination).
Filing applicable tax forms for non-U.S. funds and entities, including Form 8621 and Form 5472 reporting.
Preparation of K-1 equivalent forms for non-U.S. entity/fund investors, including PFIC and 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 gains on staking and lending.
Receiving crypto from airdrops, rewards, and mining income.

Crypto interest earnings from DeFi lending.
Crypto earned from liquidity pools and interest-bearing accounts.
Trading in coins, tokens, NFTs, and SAFE/SAFT agreements.

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

Schedule K-1 received from lower-tier SPVs, 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).

Carried interest rules under IRC Section 1061.
Qualified small business stock analysis under IRC Section 1202.
Itemized deductions and net operating losses.
Expensing and depreciation.
Effectively connected income (ECI) and withholding requirements.
Calculation of state-source income apportionment factors and state tax withholdings.

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

Schedule K-1 received from underlying venture investments.
Distribution waterfall for venture fund tax allocation.
Considerations for committed capital structures in venture funds.
Carried interest allocations and reporting as per IRC Section 1061.
Net investment income tax (NIIT) under IRC Section 1411, applicable to dividends, interest, and capital gains above certain thresholds.
Business interest expense limitations per IRC Section 163(j).
Treatment of qualified business income according to IRC Section 199A.
Considerations for managing tax obligations upon exit or liquidation of investments.

Analysis of qualified small business stock under IRC Section 1202.
Reporting of recourse and non-recourse liabilities.
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 (ECI) and fixed, determinable, annual, and periodical (FDAP) 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 and management fee allocation.
Recharacterization of long-term capital gains (carried interest) as per Section 1061.
Stuffing allocations for redeemed partners and aggregate allocation of trading income, including full netting and partial netting approaches.
Calculation and allocation of business interest expense limitations as per Section 163(j).
Qualified business income deduction.
Passive activity losses and at-risk limitations reporting.
Section 475(f) mark-to-market allocation, Section 1256 contracts, straddle, short sales rules, and constructive sales adjustments and allocations.
Footnotes and relevant disclosures on Schedule K-1s.
Reporting dividend details, i.e., domestic vs. foreign, Sections 199A, 897, 1250, REIT dividends, capital gain distributions, etc.
Handling PTP and underlying investment Schedule K-1s.

Investor vs. trader analysis and its implications.
Itemized deductions and net operating losses.
Wash sale calculations.
Reporting of recourse and non-recourse liabilities.
Dividend expense adjustments as per Section 263(h).
Gross receipts calculations as per Section 448.
Contribution and distribution-in-kind adjustments.
Handling and reporting of cross-border investments.
Preparation of additional forms and schedules, including Forms 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 K-1 received from underlying venture investments.
Distribution waterfall for private equity fund tax allocation.
Considerations for committed capital structures in venture funds.
Carried interest allocations and reporting as per IRC Section 1061.
Net investment income tax (NIIT) under IRC Section 1411, applicable to dividends, interest, and capital gains above certain thresholds.
Business interest expense limitations per IRC Section 163(j).
Treatment of qualified business income according to IRC Section 199A.
Considerations for managing tax obligations upon exit or liquidation of investments.

Analysis of qualified small business stock under IRC Section 1202.
Reporting of recourse and non-recourse liabilities.
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 (ECI) and fixed, determinable, annual, and periodical (FDAP) income generated by venture funds.
Calculation of state-source income apportionment factors and state tax withholdings.