Much of the election-year criticism of hedge funds misses the point when it focuses on the claim that hedge fund operators get unfair tax breaks, experts say.There is abuse in the current Tax Code when it comes to hedge funds, but it affects the investors, according to Alan Dlugash, a tax partner at New York-based CPA and business advisory firm Marks Paneth & Shron. They’re often subjected to taxes that wipe out nearly all — or more than all — of the income that they made from the fund, he observed.
“Hedge funds are not really tax-advantaged, they’re tax-disadvantaged,” he said. “Interestingly, investors, and even hedge fund operators, are generally unaware of this abusive dimension of the current Tax Code — at least until they take a close look at their tax return.”
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