Willys Schneider Quoted in Private Equity Manager

Willys Schneider, Partner in the Tax Department, was quoted in the October 14, 2009 article "US Tax Uncertainty Remains for Foreign Distressed Debt Buyers," which appeared in Private Equity Manager.  The article discusses a memorandum issued by the Internal Revenue Service regarding U.S. lending activities by foreign entities, and seeks to "draw the line between investment activities and the active conduct of a finance business."  Ms. Schneider commented that the memorandum is noteworthy in taking an expansive view of instances in which an agent's lending activities may be imputed to an off-shore fund, thus posing a risk of the fund becoming subject to U.S. income tax. She pointed out, however, that the activities at issue in the memorandum were clearly those of an active lending business and, therefore, that distressed debt funds may still be able to argue that if they are buying such debt in the secondary market and not holding themselves out as lenders to the public they should not be viewed as engaged in a finance business and, as such, remain exempt from U.S. tax.