Tax-Efficient Returns (Part 10)

One of the significant advantages of our Diversified Litigation Portfolio is the tax efficiency we achieve by having the returns show as capital gains — rather than ordinary income — on our investors’ Schedule K-1 tax forms.

We achieve tax efficiency by utilizing a prepaid forward contract with our attorney partners, which ensures that our investments are treated favorably under current tax laws.

Tax-Efficient Returns: How It Works

• Investments Recognized as Assets: Our litigation investments are recognized as assets on our books.
• Returns as Capital Gains: The returns from these investments are taxed as capital gains, not ordinary income.
• Offsetting Capital Losses: Investors can utilize any capital losses from other investments incurred in the same fiscal year to offset these gains.
• Lower Tax Rate: Capital gains are taxed at a flat rate of 20%, significantly lower than the top rate of 37% that applies to ordinary income.

Why This Matters

For investors who are actively managing their portfolios, the ability to offset gains with losses can significantly increase how much of your returns you get to k7eep.

What’s Next

Stay tuned for more insights into how our diversified litigation investments can enhance your portfolio’s resilience and returns.

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