Disputed ownership funds liquidating trust

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The objective of a liquidating trust is to help expedite the liquidation of the entity, and allow the owners to recognize gain or loss and to receive proceeds in an orderly manner.

In addition, it may be prudent for the fund manager to set aside certain cash reserves before making final distributions to the fund owners.

Download PDF When "Liquidating Trust" is mentioned, most people associate this with bankruptcy.

In a bankruptcy, a liquidating trust may be formed whereby certain assets are placed in a trust for the benefit of creditors who may have certain claims against those assets.

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A liquidating trust is a new legal entity that becomes successor to the liquidating fund.

The collections of information contained in these final regulations have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U. The estimated annual burden per respondent is .40 hours.

Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be sent to the , Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503. This document contains amendments to 26 CFR part 1 under section 468B of the Internal Revenue Code (Code).

A liquidating trust may also be an effective method for a fund manager to wind down a fund without having a significant role in the liquidation.

At the end of the fund's life cycle or term, the fund manager may have certain assets that are not easily liquidated and convertible into cash for distribution to the owners of the fund.

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