Hedge Funds

IRS reverses III tax ruling


In recent months, the Internal Revenue Service has increasingly been scrutinizing deferred-compensation plans, which has given some pause to numerous hedge fund groups using such schemes as part of their tax planning.

But fund groups are breathing a bit easier thanks to the recent reversal of a ruling that claimed Florida-based AVM's III Offshore Advisors owed millions in taxes. The earlier ruling, later reversed, came after an IRS audit last year found that the $2.5 billion fixed-income fund had pulled in a profit in excess of $200 million for a three-year period ending in 1997, but paid less