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Meet Hannah Tribune
Offering Legal, Tax, Trust & Banking Services to
Hedge Funds & Money Managers
 Worldwide

Incubator Funds  An "incubator" fund provides a low cost way to build a marketable performance record.  An incubator fund is a startup hedge fund seeded with the founder's (also called the "sponsor") own money. Nothing teaches capital preservation like having "skin in the game" and future investors like to see that you are personally invested in the success of your own fund. We break down startup costs into a two-step process. There is no redundancy as it costs the same amount for the full fund setup as it does for our two-step process.

No "Friends and Family" Exceptions  There is no "friends and family" exception to the law.  If you charge fees, or have investors, you are setting up a full hedge fund. We have learned through experience that what many people consider an "incubator" fund to be is a fully functional fund.   Click Here to Learn More About Hedge Fund Offering Documents

Incubator Fund Costs The cost to form an incubator fund is lower than the cost to form a fully operational hedge fund. The incubator fund can b(always) be converted to a fully operational fund at any time. Since an incubator fund formation involves much of the same work needed to form a fully operational hedge fund, no money spent to set up the incubator fund needs to be spent again to convert it to a fully operational fund. Contact Us for Incubator Fund Prices

Incubator Fund Administration You do not need a fund administrator to start and run an incubator fund.  Postponing the need to hire a fund administrator is another reason to establish an incubator fund first.  Once you have outside investors, charge performance and management fees and are fully operational, then consider hiring a fund administrator.  Fund administrators provide net asset value calculations, monthly reports, performance tear sheets, performance and management fee calculations, tax preparation services and tax accounting services. There are varying levels of hedge fund administration services available.  Your fund administrator can be a real help when it comes to running a hedge fund. Unlike many other countries, the United States does not require you to hire an administrator for a hedge fund.  Some states require a fund manager, if he is based (and licensed as an RIA) in that state, to hire a "gate keeper" for a hedge fund but using a "gate keeper" is not the same as having full fund administration services.  In the United States, administrator are not required to be licensed.   Learn More About Hedge Fund Administration, Taxes and Audit

Already Have a Trading Track Record? We create the hedge fund performance reports and marketing tear sheets you will need to present your hedge fund to investors.  Click Here For A Sample Fund Performance Report & Tear Sheet  An incubator fund (or your personal trading history) does not need a full financial statement audit prepared by an auditor.  What it does need is a performance report or compilation prepared by a licensed accountant.  Learn More About Hedge Fund Accounting  We offer outstanding hedge fund administration, NAV services, custodial services and tax return filing services.  Contact Us for a Free Consultation


Standard Incubator Fund Structure In the United States (only) an incubator fund structure requires a Delaware limited partnership (LP) as the fund entity and a limited liability company (LLC) as the management company entity (i.e., two companies).  The LLC is usually based in your home state, but there are other planning options available to you. You will invest in your LP as the initial "seed capital" investor. Both the LLC and LP are the same entities used when the fund is converted to a fully-operational fund. There is no need to create additional companies in the future using this approach. 

New Approach Incubator Fund Structure  Recently, we have seen the opportunity in the United States to use a Delaware LLC alone as the incubator fund. This approach requires more expense in the future (to convert to a fully operational fund) than the standard incubator fund involving two companies at onset.  The reason for this is that the legal work is more difficult See See World's Favorite New Tax Haven Is the United States and Learn More About the Benefits of Delaware Companies

Complex Incubator Fund Structures  In some cases we suggest tiering a Delaware LLC above a Florida LLC for regulatory and tax purposes.  Ask us about this option.  If you live in a high tax state or country you may consider setting up three companies:  the hedge fund, the investment management company (i.e., the company where discretionary trading authority and decisions take place) to receive the carried interest share in the future (i.e., the performance allocation) and a management company to receive the management fee in the future (i.e., the company where management of the fund's books and records takes place).  We can help you plan complex structures for tax and regulatory purposes.  We have learned through experience that what many people consider an "incubator" hedge fund is in fact a fully functional hedge fund.  There is no "friends and family" legal exception either to the rules.  If you charge fees in the United States, you are not setting up an incubator fund.  Contact Hedge Fund Attorney Hannah Terhune for a Free Consult

Incubator Fund Regulatory Filings An incubator fund normally does not require regulatory filings. However, in some cases, however, a SEC Form D filing is needed for an incubator fund as well as state blue sky.  Learn More About Hedge Fund Offering Documents and Learn More About SEC Form D Filings  and Contact Hedge Fund Attorney Hannah Terhune  In some cases, investment adviser registration may be required.  Learn More About SEC RIA Formation and Learn More About State RIA Formation

How are Incubator Hedge Funds Taxed? The U.S. incubator fund is taxed as a pass-through entity.  This means that the incubator fund's realized gains and losses are taxed at the investor level.  The tax character (i.e., ordinary income or capital gain treatment) of the gains and losses pass through to the investor (i.e.,reported on IRS Form K-1).  Learn More About Hedge Fund Taxation  Offshore incubator funds are set up as corporations, generally, and with respect to U.S. investors, can work as UBTI blockers.

How much money do I need to seed the incubator fund? There is no minimum investment amount.  You are just trying to create a performance percentage based on real time trading.  See a Sample Performance Report & Tear Sheet

Converting a U.S. Incubator Hedge Fund to a Fully-Operational U.S. Hedge Fund To transition to a fully operational hedge fund that allows you to charge fees, you will need to prepare offering documents which include a private offering memorandum, partnership agreement, and subscription documents and file SEC Form D.  Form D and state blue sky filings. Learn More About Hedge Fund Fees and Contact Us for Assistance

Hedge Fund Banking and Brokerage Services For either banking or brokerage services, you cannot use your personal account as the hedge fund’s account.  The hedge fund needs its own bank and brokerage account. If you are our client, we can introduce you to bankers and brokers who may be interested in working with you and your new hedge fund. Contact Us for Assistance

Can I gather indications of interest from potential investors during the incubation phase?  Yes.  Performance information about the incubator hedge fund can be provided to preexisting and potential contacts at any point after the fund's inception.  You can gather indications of interest through your personal network, friends and family (i.e., persons with whom you have a pre-existing relationship).  Learn More About Attracting Investors

Can I submit data to hedge fund databases while I am operating the incubator fund? Yes.  Learn More About Hedge Fund Marketing

Can I operate more than one incubator fund? Yes.  Some managers will incubate multiple funds in order to develop track records for different strategies.

Using Personal Performance Data Versus Incubator Fund You can use proprietary trading data to market  yourself. However, you cannot use that proprietary trading data to market a new hedge fund. Over the years the SEC has issued rules for performance advertising through a series of enforcement actions, "no-action" letters and interpretive letters.  The SEC rules are very difficult to follow. First of all, if you are not a registered investment adviser, you have no business advertising your services as such. You should not be soliciting clients, holding your advisory services out to anyone or marketing your prior performance results.  You have no license.  Investment adviser advertising, including performance advertising, is governed by Rule 206 of the Investment Advisers Act of 1940.  If you are not SEC licensed, you are subject to state investment adviser law. None of the states allow you to advertise your services (i.e., hold them out to others) without state registration as an investment adviser.  Learn More About SEC Registration An ad is a written or oral communication addressed to more than one person which offers investment advisor services. It is something communicated to attract or maintain clients.  The SEC gives a broad brush to the concept of an ad.  It also gives a broad reading to what it considers false, misleading or untrue.  This means that if every single sentence of your ad is true but the over-all effect is deceptive and misleading, the SEC views it as fraudulent.  Learn More About Hedge Fund Marketing The sniff test for fraud is so subjective that the SEC won't give advice as to whether an ad is misleading.  Contact Us for Assistance

Funding the Incubator Fund With very few exceptions, the incubator fund should not accept outside investors. Even investment from close friends and family can run afoul of state and federal securities law, especially if they are non-accredited investors. You should not borrow capital from others to invest in the incubator fund.  The regulators look through this arrangement. You should consult with us prior to accepting any outside funds from any source.

Can I add or withdraw money from my incubator fund? Yes.  The track record of the fund is measured as the percentage return of assets under management, regardless of the amount of capital contributed to or withdrawn from the fund.  Learn More About Hedge Fund Performance Reports

Should I Make a Mark-to-Market Election? Yes, the fund has to qualify by its level of trading activity to be able to make the mark-to-market election.  Learn More About Mark-to-Market Election

CALL US FIRST We are experts. Click on any reference below to our leading articles:

Strategic Hedge Fund Planning by Hannah Terhune.  Wilmott Magazine Ltd. (Volume 2013, Issue 63, pages 8-11 January 2013).

Hedge Funds - Limited Partners' Right of Access After Parkcentral Global, L.P., v. Brown Investment Management, L.P. by Jim Brennan.   Cititrust Edge Magazine (4th Quarter 2012).

Strategic Hedge Fund Planning by Hannah Terhune. Canadian Hedge Watch (March 2012).

Strategic Hedge Fund Planning by Hannah Terhune. MoneyScience (March 2012)

Hedge Funds - Limited Partners' Right of Access After Parkcentral Global, L.P., v. Brown Investment Management, L.P. by Jim Brennan.  Canadian Hedgewatch (July 2011).

Planning for Cross-Border Financing Arrangements.  Practical International Tax Strategies (May 31, 2011).

U.S.--Tax Traps of Non-U.S. Issuer Debt Offerings.  Practical International Tax Strategies (April 15, 2011).

America the Beautiful Tax Haven. Cititrust Edge Magazine (1st Quarter 2011).

Offshore Hedge Fund Focus:  Master & Feeder.  Cititrust Edge Magazine (4th Quarter 2010).

U.S.--Cross Border Credit Agreements:  Planning for U.S. Withholding Taxes.  Practical International Tax Strategies (November 15, 2010).

Starting an Offshore Fund.  themanager.org (June 2008).

Mixing Investment Adviser and Brokerage Services.  Hedge Fund Monthly by EurekaHedge.com (October 2007).

Offshore Fund Taxation.  Hedge Fund Monthly by EurekaHedge.com (May 2007).

Forex Trader to Forex Manager.  Offshore Business Magazine (November 2006).

Forex Trader to Forex Fund Manager:  The Path to Success.  Hedge Fund Monthly by EurekaHedge.com (October 2006).

Drafting Hedge Fund Performance Allocations.  Hedge Fund Monthly by EurekaHedge.com (August 2006).

Como Crear su Propio Hedge Fund by Hannah M. Terhune, Eva Porras, Argilio Rodriguez and Garrett Fisher (2006).

Offshore Hedge Funds: Focus on Master/Feeders by Hannah M. Terhune (2006).

Temas Sobre Impuestos de Sociedades Colectivas para Hedge Funds en Paraiso Fiscal by Hannah M. Terhune (2006).

Establish a Marketable Track Record with an Incubator Fund by Hannah M. Terhune (2006).

Must I Register as a Commodity Pool Operator? by Hannah M. Terhune (2006).

Do’s and Don’ts for Crafting Hedge Fund Performance Allocations by Roger D. Lorence and Hannah M. Terhune. Derivatives:
Financial Products Report (an RIA publication) (September 2005).

Trading Foreign Index Contracts? Know the Tax Rules Before You Trade by Hannah M. Terhune and Roger D. Lorence. Stocks, Futures and Options (June 2005).

Practical Strategies For Section 475(f) Elections by Roger D. Lorence and Hannah M. Terhune. Derivatives Financial Products Report (WG&L/RIA, a Thompson Company) (March 2005).

Forex Hedge Fund Management by Hannah Terhune and Roger D. Lorence.  Currency Trader (March 2005).

Advising Clients on Internet Server Co-Location Agreements, Practical International Tax Strategies (March 15, 2004).

Structuring and Financing International Operations Using Hybrid Entities and Tax-Efficient Financing Practical U.S./International Tax Strategies (Jan. 15, 2004).

Hedge Fund Compensation Arrangements. Practical U.S./Domestic Tax Strategies at Page 18 (Dec. 2003).

U.S. Inbound Investment – The Portfolio Interest Exemption. Practical U.S./International Tax Strategies (Dec. 15, 2003).

Foreign Futures Planning: The 60/40 Question. Practical U.S./International Tax Strategies at Page 12 (Sept. 30, 2003).

Managing Offshore Hedge Funds - A View from the Beach: Practical U.S./International Tax Strategies at Page 9 (June 15, 2003).

Offshore Hedge Funds - Master/Feeder Compliance Issues: Practical U.S./International Tax Strategies at Page 9 (May 15, 2003).

Questions? Call us (307) 739-6492 or write to us.

LEADING MEDIA CONTENT & ARTICLES ON HEDGE FUNDS & INTERNATIONAL TAX

Read helpful articles on hedge funds and international tax planning by Hannah Terhune, a leading hedge fund and international tax attorney. Hannah Terhune's articles are hedge fund and tax planning articles are widely published on the Internet and recommended by TheStreet.com and other respected media. Contact Us for Articles & Reprint Rights Follow @HannahTerhune
ARE YOU AFRAID OF WHAT YOU DO NOT KNOW? Get answers to your specific questions by speaking directly to Hannah Terhune, an experienced hedge fund and international tax attorney. Ms. Terhune's hard-earned knowledge and experience can be put to work to save you unnecessary steps and costly wasted effort. The consultation is an invaluable opportunity to speak to Hannah one-on-one and learn how to achieve more in less time. As a result, you can anticipate that the return on your investment will far outweigh the costs associated with our unsurpassed services. Ms. Terhune's credentials reflect an invaluable resource that combines a well-informed professional practitioner with sound ethical judgment that cannot be overestimated. The expertise required to recommend best solutions and provide sound advice should never be taken lightly. when you are finished with your consultation, you will be impressed and informed about your business plans.  Contact Hannah Terhune now!

WHY HIRE US When you hire us for hedge fund you get a unique combination of securities, tax, and international experience, focused on the trader niche. We are one destination for special hedge fund and trader tax needs. We think we have the best set of offering documents based on the current and ever changing federal, state, and offshore securities, commodities, and tax laws. We aim and deliver quick turnaround times. We understand that clients want to begin business as soon as possible. We conceive, structure, and deploy the best strategies. Our customers value our one-stop shop relationship. We help you start your business and continue to assist you. Our tax services affiliate handles accounting, software, and tax compliance, including all tax matters (tax planning and tax returns). Only one thing counts with us and that is our customer relationships!

Capital Management Services Group, Inc. is an authority in the hedge fund industry. It is a forward-thinking law firm focused on creating long-term collaborative relationships with a select group of clients interested in the same. It strives to provide “high touch” service and perform a defined set of legal and other services with impeccable efficiency.

We offer corporate “white glove” concierge service to select clients. We set up many types of funds, provide business advice and offer ongoing support to all clients. We try to help people as their needs evolved. Our best ideas are not on this website. Are you trying to develop a tax or regulatory footprint outside of your home country? We offer extended office services in Delaware and in other locations beyond the industry norm. We offer unique ideas and the bandwidth to implement them. We offer tax planning services, tax accounting, books and records preparation, and tax return filing services. If you have a business plan that is unique, know that countries offer “sandbox” regimes for businesses that do not fit into an existing regulatory framework.

You may have an unusual situation that needs special attention. We are ready to help. We offer complete 24/7 access and great working relationships. We are simply second to none. Think outside the ordinary. Our best ideas are not on this website. When you consult with us, you have access to a unique and desirable blend of personalized,yet, professional experience. Give us the opportunity to put our knowledge and expertise to work for you. We provide high quality services at competitive rates.  We look forward to connecting with you personally and are confident that you will be impressed.  We help our clients as their needs evolve and take pride in maintaining relationships with our clients.

Henry David Thoreau wrote: "Do not hire a man who works for money, but him who does it for love of it."  We are committed to bringing you the best possible options.  We are an internationally recognized business serving clients while educating the industory. We do this by striving for the best results. We are a law firm and not a document chop shop.  A lawyer is a philosopher and role model. The ability to improve client lives is a privilege that we do not take lightly. There is tremendous power in being able to effect a positive change in the world.

Thanks for visiting our website.  We hope to have the opportunity to serve you. The views expressed on this website are subject to change based upon new information, new technology, consideration of new perspectives and/or for no reason at all. This website exists for educational purposes and nothing on this website should be considered as legal advice. Website content and design are copyrighted 2025© by Hannah M. Terhune and all rights are reserved.