Foreign Equity Offerings in the U.S.: Tax Consequences for Investors

Summary

This practice note discusses the principal U.S. federal income tax consequences to a private fund and its investors of owning common stock or American Depository Shares (ADSs) of a foreign corporate issuer. This practice note assumes that the private fund is taxable as a partnership for U.S. federal income tax purposes and that investors are not pass-through entities, but are U.S. citizens, resident aliens or domestic corporations for U.S. federal income tax purposes. While non-U.S. investors can invest in U.S. partnerships and funds, this practice note does not delve into the tax consequences of non-U.S. investors who hold stock of foreign issuers indirectly through a U.S. fund.