Investment Fund Business Structure & Brokerage Accounts

[StefanMHofer]

Hi All,

I've read many forum posts and have some questions regarding investment fund business structures and brokerage accounts.

Re investment fund business structure. I am a dual citizen and reside in Toronto. I plan on operating an investment fund to trade futures. Seed capital will be 100K - investors will be 1 U.S. based investor and myself. I was advised that PFIC rules create tax disadvantages for US based investors when investing in foreign based investment funds. Therefore, I think creating a US based investment fund makes sense. I was advised that creating a Illinois based LP with a "blocker" C - corp would mitigate taxes, and would be beneficial for the US based investor and myself. What about using the other business structures e.g. LLC or S - corp? How does this affect me - would I be treated as an investor of the business structure even though I created it and or have ownership in the fund?

Re brokerage accounts. I am a dual citizen and reside in Toronto. According to many posts by Nelsona, Canadian brokerage accounts are advised for ppl residing in Canada - I don't want to spoof a US address. To fund the brokerage accounts, I would open a bank account in Canada for 100K, then wire transfer or ACH the funds to the brokerage account. But as mentioned above, I would like to create a US based investment fund. Because the business structure is formed in the US and the "blocker" entity formed in the US too, does this create regulatory problems, tax issues, and is this even possible? Can I operate my trading business in Canada while creating the business entities in the US to mitigate taxes for US based investors?

Your knowledge and insight is very much appreciated!