The IRS said it will publish guidance and may restrict trades used to generate ordinary losses that wealthy clients use to cut tax bills, highlighting currency bets and equity swap/futures combinations used in tax-aware long-short strategies.
IRS plans formal guidance and potential restrictions on trades used to create ordinary losses, naming currency bets and equity swap-plus-futures combinations as areas under review.
AQR’s Delphi Plus strategy, which reported large ordinary losses in 2025 and had $6.6 billion in assets midyear, is the best-known product tied to this approach.
Tax-aware long-short strategies have expanded rapidly, drawing over $150 billion in a three-year span and prompting scrutiny over whether some funds are primarily tax-motivated.
Tax-slashing strategy popularized by largest hedge fund faces IRS crackdown | Accounting Today Author Follow Us facebook linkedin whatsapp twitter © 2026 Arizent. Stefani Reynolds/Bloomberg A strategy popularized by AQR Capital Management, the world's largest hedge fund, to help wealthy people slash their taxes on ordinary income is facing the most concrete sign yet that U.S. AQR runs the best known strategy — dubbed Delphi Plus — aimed at producing that outcome.
For many, it's the "holy grail," said Orso Partners portfolio manager Nathan Koppikar, a short seller who has been betting that authorities would intervene. "The total addressable market is huge if the Treasury doesn't do anything about it," said Daniel Hemel, a professor at New York University School of Law. It would be "carried interest on steroids," he said, referring to the controversial low rates that private equity executives long paid on their gains.
Processing Content As part of an array of warnings to Wall Street on Monday, the Internal Revenue Service said it plans to publish guidance and may take other steps to bar certain trades that money managers are using to help clients harvest losses and lower tax bills on ordinary income. Representatives for AQR didn't reply to messages seeking comment. That would also take an even bigger bite out of U.S.
The Treasury Department took a big step toward curbing a Wall Street boom in investment strategies that cut tax bills, with a notice signaling potential action.
The IRS drew new boundaries around 351 conversions, targeting cases in which, as part of a prearranged plan, an ETF effectively serves as a conduit to convert one set of appreciated securities into a materially different portfolio without an immediate tax bill.
Grantor retained annuity trusts (GRATs) are a longstanding staple of high-end estate planning. The basic structure is well-traveled: a grantor transfers appreciating assets to an irrevocable trust, retains an annuity for a fixed term, and—if the assets outperform the rate on the annuity—shifts excess appreciation to be
It’s the latest in a series of moves that highlight the risks and concerns around one of the most popular trades on Wall Street.
The government recently ruled out a ‘bed tax’, which raised the hackles of Auckland mayor Wayne Brown, who said the proposed revenue-gathering tool was actually a levy. Is he right, and should we care? In line with National’s “ no new taxes ” campaign fixation, in late August Christopher Luxon ruled out implementing an
Every so often, I’m asked what kind of things we should be looking for, as a society, when the legislature is in session and is considering different ways to beat money out of us. So, here is what I think. Taxation is, primarily, a means of spreading the cost of a civilized society, namely the […] The post A Fair Tax a
Loading more related stories...
Open the app view to save this story, compare related coverage, and continue from the same source.