The Internal Revenue Service knocked down one way for hedge fund managers to dodge restrictions in President Donald Trump’s tax law, but for some managers, there’s still a way out, Bloomberg News reported. New limits on carried interest profits don’t apply to regulated futures contracts or contracts to trade foreign currencies. For managers who rely heavily on those strategies, a chunk of their assets can continue to be taxed at a much lower rate, even if they don’t hold them for three years as the law requires. Under the old tax regime, hedge funds and private equity managers had to hold their investments for one year to get the long-term capital gains rate of 20 percent. Otherwise, they had to pay individual income tax rates, which now top out at 37 percent. But those holding the futures or foreign currency contracts didn’t have to meet any time period — they could elect to have 60 percent of the trade qualify for the long-term rate. And despite the new tax law, they’ll still be able to do so, according to half a dozen tax experts.
