Established funds
Changing CPA firms? We take over the Form 1065, K-1s and fund accounting, working from your administrator's reports.
For new and established US funds
Tax and accounting for hedge funds, their managers and their investors.
Cloud Accounting is a tax and accounting firm for US hedge funds, their managers and investors. We do each fund's Form 1065, K-1s and fund accounting. We do books and federal, state and city returns for the management company and general partner (GP), and returns for partners and investors. Our team has worked with first funds and large multi-strategy funds. Changing CPA firms? We can take over. Canada or mainland China too. Free 10-minute call.
- US and Canadian CPA
- Funds, managers & partners
- Federal, state & city tax
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Free · 10 minutes
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Who it's for
Launching a first fund
New manager? We set up the books and map each entity's returns, elections and dates.
Management company and GP
Books, returns and state and city tax for the firms that run your funds, including New York City's.
Fund partners and employees
Carry, carry points or a deferred bonus from a hedge, private equity or venture fund, on your return. Plan payouts and state moves.
Investors with many K-1s
Late K-1s and returns in many states. We extend, estimate and file your federal and state returns.
Private equity and other funds
Several funds, each with a GP? We serve private equity, venture, real estate, credit and crypto funds, and family offices.
What we do, by who you are
The fund
- Form 1065 and K-1sFor each fund and its feeder or master funds, with tax allocations to each partner and Schedules K-2 and K-3.
- Fund accountingNet asset value (NAV), capital accounts, allocations and investor statements.
- Book-to-tax for tradingWash sales, short sales, straddles and section 1256 futures, carried to each partner's K-1.
- Trader status and mark-to-marketTrader or investor fund for tax? It decides if individual partners can deduct fund costs. Mark-to-market makes trading gains and losses ordinary.
- State returnsNew York and other states' partnership returns, and nonresident partner filings.
- Foreign partner withholdingForms 8804, 8805, 8813, 1042 and 1042-S, when the fund must withhold.
Management company and general partner
- BookkeepingFees, salaries and expenses, kept apart from the fund's books.
- Form 1065, 1120-S or 1120The management company's return, whatever its tax type.
- General partner returnsFor each fund's GP: Form 1065 and K-1s, with the carried interest worksheet the 3-year rule needs.
- State and city taxState returns and New York City's 4% unincorporated business tax. PTET planning: state tax paid by the business.
Principals
- Form 1040Your return with fund K-1s, fees and estimated tax payments.
- Carry and incentive allocationsThe 3-year rule, the fund's worksheet and the matching lines on your return.
- FBAR and Form 8938Foreign accounts you own or can sign on, and which ones you must report.
- Tax planningEntity choice, self-employment tax, state moves and the timing of income.
Investors
- Returns with many K-1sEvery fund K-1 on your Form 1040, with the state returns they bring.
- Late or corrected K-1sAn extension and estimate by April 15, then your return, updated if a corrected K-1 follows.
- Offshore fund reportingForms 8621 and 8938, when required, for US persons in a fund outside the US.
Partners and managers outside the US
- Form 1040-NRFor investors outside the US whose fund has US business income, claiming the tax it withheld.
- Form 5472For a US corporation at least 25% owned from abroad, or a one-owner LLC owned from abroad.
- Canadian returnsT1 with Form T1135 and a credit for US tax; T2 with Form T1134 for a Canadian management company.
- Chinese individual income taxFor mainland China residents with fees, carry or fund gains from abroad.
We work alongside your fund administrator, auditor and lawyer. We don't do audits or other attest work: an independent firm audits the fund. We don't draft fund documents, handle securities registration or give investment advice.
What it costs
Quoted for youAfter your consultation
Quoted after your free call, based on your entities, investors and countries. You see the fee before any work starts.
Free · 10 minutes
Book a consultationHow it works
- 01
Book a free call
Ten minutes by phone with one of our CPAs. Tell us about your funds, their entities and their investors.
- 02
Get a quote
Every entity, return and K-1 listed, with the fee, before any work starts.
- 03
Share your records
Upload them to the secure client portal, never by email. We can work from your administrator's files.
- 04
Review and file
We walk you through each return and file it once you approve. Investors get their K-1s.
What to prepare
Bring what you have. Missing records can be part of the conversation.
- Your entities: each fund and any feeder or master fund, each general partner, and the management company.
- Where each entity was formed, and where you and your investors live for tax.
- What the fund does: trades securities, or lends, owns property or invests in private companies.
- The partnership agreement, or a summary of fees, carry and how profits are shared.
- Last year's returns, K-1s and workpapers, recent statements, and any IRS or state tax letters.
Common questions
Short answers here. For your own situation, ask at a consultation.
Book a consultation
Do you work with established funds, or only new ones?
Both. Established funds can switch to us from another CPA firm, mid-year or at year-end. New managers can start before launch: entities formed but not trading yet may still have to file. We also serve private equity, venture, real estate, private credit and crypto funds, and family offices.
How is a hedge fund taxed, and what does it file?
Most US hedge funds are taxed as partnerships. Partners, not the fund, pay federal income tax. The fund files Form 1065, a K-1 per partner, and usually Schedules K-2 and K-3. A calendar-year fund files by March 15, or September 15 with Form 7004. For returns due in 2027, each late month costs $260 per partner, up to 12. A 50-partner fund three months late faces $39,000. Each late or wrong K-1 can add $340.
Do you do fund accounting? Who does what with our administrator, auditor and lawyer?
Yes. We can keep the fund's books and capital accounts and calculate net asset value (NAV). We also prepare investor statements, so the K-1s come from the same numbers. Have an administrator? We work from its reports. Your fund's audit stays with an independent auditor. Your lawyer drafts the private placement memorandum (PPM) and partnership agreement. We do no audits, reviews or other attest work, securities filings or investment advice.
We already have a CPA firm and an administrator. Can you take over?
Yes, for the returns, K-1s and fund accounting, mid-year or at year-end. We start from last year's returns and K-1s, the prior workpapers, the partnership agreement and your administrator's reports. We carry forward each partner's capital account and each fund's elections and allocation methods. Already in K-1 season? Tell us your deadline on the call. Investor onboarding, AML/KYC checks and subscriptions stay with your administrator.
Does our management company owe state or city tax?
Often, where the state or city taxes the business itself. New York City's unincorporated business tax is 4% of taxable income allocated to the City. It exempts a fund that only trades for its own account, but not a manager earning fees. Other states and cities have their own rules. We file the manager's state and city returns and check whether a pass-through entity tax election lowers the partners' tax.
My fund K-1s are late. Do I extend, and what do I pay?
Extend and pay an estimate by April 15. The extension gives more time to file, not to pay. A fund on extension can send K-1s as late as September 15. Your extended return is due October 15. We set the estimate and file every state return the K-1s bring. K-1s still missing near the deadline, or new this season? Tell us your deadline on the call.
How are carried interest and incentive allocations taxed?
They are your share of the fund's profits, taxed as gains, dividends or interest. Under section 1061, carry gain is long-term only on assets held over 3 years. Usually the clock is the fund's holding period, not your payout date. The 2025 tax law did not change this. Qualified dividends, section 1256 futures and section 1231 gains on business property fall outside the rule. We carry the fund's K-1 worksheet figures to your return.
We have a master-feeder fund: Delaware and Cayman. What files in the US?
Each fund has its own US rules. The Delaware fund files Form 1065 and sends K-1s to its partners. A Cayman master fund with US partners and US income usually files Form 1065 too. A Cayman feeder that only trades usually files no US return. US dividends allocated to it are still withheld at 30%, reported on Form 1042-S. We map each entity's filings and dates, including the management company's.
Our fund has investors in Canada, China or Hong Kong. What do they file?
A fund that only trades securities for its own account usually leaves them no US tax on trading gains. US dividends are still withheld: 15% for Canada and 10% for mainland China with a W-8BEN, 30% for Hong Kong. If the fund has US business income, it withholds and individual investors file Form 1040-NR. Canadians in a US limited partnership report their share on the T1, claim a credit, and may need Form T1135.
We run or are launching a US fund from Canada, mainland China, Hong Kong or Taiwan. Can you help?
Yes. We prepare the fund's and management company's US returns and K-1s. A US LLC with one owner abroad files Form 5472 when money moves between them. This applies even with no income. It goes with an information-only Form 1120, due April 15. Missing Form 5472 can cost $25,000. We also prepare Canadian returns and Chinese individual income tax. Hong Kong and Taiwan returns stay with your local adviser.
How much does it cost?
It depends on your entities, the number of investors, and the states and countries involved. You get a quote after your free call, before any work starts, and you decide.
Guides on this topic
- Starting a Hedge Fund: First Returns, K-1s and Tax Elections
- Carried Interest 3-Year Rule: Section 1061 Worksheets A and B
- Limited Partner Self-Employment Tax After Soroban: Fund Managers
- Hedge Fund Manager or RIA: LLC or S Corp After Soroban?
- NYC UBT for Fund Managers and GPs: NYC-204 and the UBT Credit
- Fund State Returns: Nonresident Withholding and Composite Returns
Show all 50 guides
- CPA for Many Fund K-1s, Carry and Several States
- Fund Manager Taxes When Moving From New York to Florida or Texas
- Do I Have to File a State Return for Every State on My Fund K-1s?
- Issuing Fund K-1s on Time: Deadlines, Close and Preparer Changes
- Family Office Tax Structure: Can a US Family Office Deduct Costs?
- Family Office Accounting Services: Books, K-1s and Every Return
- Real Estate Syndication Tax Returns: K-1s and Sponsor Fees
- Section 754 Election When a Fund Investor Sells or Redeems
- What Is a Blocker Corporation, and Does Our Fund Need One?
- Becoming a Partner at a Fund Manager: Buy-In and First K-1
- Fund Administrator or Accounting Firm: Who Keeps Which Books
- Tax Capital vs Book Capital: Why Fund K-1s Don't Match NAV
- K-1 Arrives After April 15: What Fund Investors Pay and File
- QSBS Through a Venture Fund: Which LPs and Carry Holders Qualify
- Final K-1 From a Fund: Basis, Gain and Suspended Losses
- Foreign Investors in US Funds: K-1s, Withholding and Refunds
- Opportunity Zone Tax Coming Due: Deferred Gain and Form 8997
- Leaving a Fund: Deferred Pay, Make-Whole and Garden Leave Taxes
- Deferred Compensation After Moving Out of New York or California
- Delaware Statutory Trust (DST) Taxes After a 1031 Exchange
- Search Fund: LLC or C Corporation? QSBS, Search Costs and K-1s
- How Private Credit Funds Are Taxed: PIK, OID, Fees and K-1s
- Hedge Fund Deferred Bonus: When It's Taxed and FICA at Vesting
- Independent Sponsor Taxes: Closing Fees, Rolled Fees and Promote
- SPV Tax Returns and K-1s: What a Single-Deal SPV Files Each Year
- Crypto Hedge Fund Tax Returns: 1099-DA, Wallet Basis and K-1s
- Phantom Carry and Carry Points: Taxes, Vesting and the 83(b)
- IRS Letter 2205-D for a Fund: Imputed Underpayment and Push-Out
- Bonus Withholding and Estimated Tax in a Big Fund Bonus Year
- Opportunity Zone vs 1031 Exchange: Invest Now or Wait for OZ 2.0?
- Can Passive Losses Offset Capital Gains? Fund K-1 Carryovers
- Form 1042-S for Funds: Portfolio Interest Exemption and Dividends
- Can a Limited Partner Be a Real Estate Professional?
- Winding Down a Fund: Final 1065 and K-1s, Holdbacks and Trusts
- Repaying a Signing Bonus or Carry Clawback: How the Tax Works
- Does a Fund File an FBAR? Forms 5471, 8865, 926 and 8621
- Form 8996: How to Set Up a Qualified Opportunity Fund
- Inherited Partnership or Fund Interest: Basis and 754 Election
- How Partnerships and Multi-Member LLCs Are Taxed
- State Pass-Through Entity Tax: Should You Elect It?
- State Income Tax When Your Business Crosses State Lines
- Late Business Return Penalties and How to Seek Relief
- Foreign Partners: What a US Partnership Must Withhold and File
- FBAR and Form 8938: Reporting Foreign Accounts to the US
Official sources
- IRS: Instructions for Form 1065 A partnership generally pays no income tax itself; a US partnership with income or deductible costs, or a foreign one with US-source income (with exceptions), files Form 1065, due March 15 for a calendar year, and gives each partner a K-1 by the return's due date, including extensions.
- IRS: Partnership Instructions for Schedules K-2 and K-3 (Form 1065) A partnership with items of international tax relevance files Schedules K-2 and K-3, unless it meets the domestic filing exception, which needs little or no foreign activity and only US individual or similar direct partners.
- IRS: Instructions for Form 7004 Form 7004 gives an automatic extension of time to file, generally 6 months.
- IRS: Revenue Procedure 2025-32 For returns due in 2027, a late partnership return costs $260 per partner per month, and each late or wrong K-1 can cost $340.
- IRS: Instructions for Form 5472 A US corporation at least 25% foreign-owned, or a US disregarded entity wholly owned by a foreign person, files Form 5472 when it has a reportable transaction with a related party, such as money moved to or from its owner; the disregarded entity attaches it to a pro forma Form 1120, and the penalty for not filing is $25,000.
- IRS: Partnership withholding A partnership withholds 37% (non-corporate) or 21% (corporate) on US business income of foreign partners, reported on Forms 8804, 8805 and 8813; US dividends and similar income are withheld at 30% and reported on Forms 1042 and 1042-S.
- US Code: 26 U.S.C. 864(b)(2) Trading in stocks or securities for one's own account, other than as a dealer, is not a US trade or business.
- IRS: Tax treaty table 1, withholding rates The treaty rate on US dividends paid to portfolio investors is 15% for residents of Canada and 10% for residents of China.
- IRS: Tax treaty table 3, list of tax treaties Neither Hong Kong nor the Cayman Islands is on the list of places with a US income tax treaty in effect.
- IRS: NRA withholding Most US-source income paid to a foreign person is taxed at 30% unless the Code or a tax treaty gives a lower rate; a foreign beneficial owner documents itself on Form W-8BEN, and the withholding is reported on Forms 1042 and 1042-S.
- IRS: Instructions for Form 1040-NR A nonresident alien engaged in a US trade or business must file Form 1040-NR, and claims tax a partnership withheld, shown on Form 8805, as a payment on the return.
- CRA: Questions and answers about Form T1135 Form T1135 is required when the total cost of specified foreign property was more than $100,000 at any time in the year, and is due with the income tax return.
- CRA: Income Tax Folio S5-F2-C1, Foreign Tax Credit Canadian residents are taxed on worldwide income, and a partner's share of foreign tax paid by a partnership counts as tax the partner paid, with the foreign income worked out under Canadian rules.
- CRA: Information returns relating to foreign affiliates (Form T1134) A Canadian taxpayer files a Form T1134 supplement for each foreign affiliate, such as a non-resident corporation it owns, within 10 months of year end; small dormant or inactive affiliates are exempt.
- IRS: Get an extension to file your tax return An extension gives individuals until October 15 to file, but tax owed is still due by the April filing date.
- IRS: Section 1061 reporting guidance FAQs Gain on a carried interest (an applicable partnership interest) is long-term only if the asset was held more than three years, and the partnership attaches Worksheet A to the K-1.
- Public Law 119-21 (the 2025 tax law) The 2025 tax law leaves section 1061 unchanged, so the three-year rule for carried interest still applies, and it makes the end of miscellaneous itemized deductions permanent (section 70110).
- eCFR: 26 CFR 1.1061-4, section 1061 computations Section 1231 gains, section 1256 gains and qualified dividends are left out of the three-year rule for carried interest, and the partnership's holding period in the asset sold is the one that counts.
- IRS: Topic 429, Traders in securities Traders deduct business expenses and can elect mark-to-market by the unextended due date of the prior year's return, which makes trading gains and losses generally ordinary; investors can't elect it.
- IRS Publication 550, Investment Income and Expenses Explains the tax rules for wash sales, short sales, straddles and section 1256 contracts (marked to market, 60% long-term and 40% short-term).
- IRS: Publication 529, Miscellaneous deductions A partner's share of a partnership's investment expenses is a miscellaneous itemized deduction, which individuals can no longer deduct.
- NYC Finance: Unincorporated business tax New York City taxes unincorporated businesses at 4% of taxable income allocated to the City; a person or entity, other than a dealer, only buying, holding and selling property for its own account is exempt.
- IRS: Instructions for Form 8621 A US person who holds shares of a passive foreign investment company (PFIC) generally files Form 8621 with their return; small holdings with no distributions, sales or elections are exempt.
- IRS: Comparison of Form 8938 and FBAR requirements Form 8938 goes with your tax return and has higher thresholds. It does not replace the FBAR; you may need both.
- FinCEN: Report Foreign Bank and Financial Accounts A US person with a financial interest in or signature authority over foreign accounts files an FBAR when their total value exceeds $10,000 at any time in the year. Individuals file online without registering.
Use these for background; they do not replace advice on your situation. Links checked .
