Method and System: 1 to Automatically Segregate Income that is (a) 'Exempt From' from the Unrelated Business Income Tax, from Income that is (b) 'Subject To' the Unrelated Business Income Tax; 2 to Create Leverage (without Debt Financing); and 3 to Control the Allocation of Investment Profits between Accounts and Investors; in order to Accelerate the Growth of Retirement Accounts and other Tax Exempt and/or Tax Deferred Entities and Accounts in compliance with the Unrelated Business Income Tax in 26 USC 511-514

摘要

Methods, structures and systems are disclosed which, in their separate parts and when used in combination:[1] provide a mechanism to automatically segregate according to its “tax characteristics” (as determined for U.S. Federal Income Tax purposes) (a) that certain “income” derived from any particular “investment” or group of “investments” which is/are “subject to” the Unrelated Business Income Tax, away from (b) that certain “income” derived from the same or any other “investments” which is/are “exempt from” the Unrelated Business Income Tax, and thus provide a mechanism for “investments” to be made by “tax exempt” and “tax deferred” entities and accounts without a prior conclusive determination of whether any particular investment will generate “income” or “profits” that are “subject to”, or “exempt from”, the Unrelated Business Income Tax (i.e., the “UBIT”, imposed on “tax exempt” and “tax deferred” entities and accounts by 26 USC 511-514, IRC 511-514);[2] permit the addition of an optional mechanism to facilitate the use of “leverage” without “debt financing” to substantially increase the Return on Investment (ROI) allocable to particular “investors” intended to be favored (the “favored investors”), without such “leverage” causing the “income” or “profits” realized (that would not otherwise be “subject to” the UBIT) to become “subject to” the UBIT on account of “debt financing” within the meaning of IRC 512(b)(4);[3] permit the addition of an optional mechanism to facilitate the use of “debt financing” to leverage investment returns (which causes the “income” generated from the “debt financed” investment to become “subject to” the UBIT, under IRC 512(b)(4)-), with the mechanism described in ¶[1] above providing the mechanism to “automatically segregate” the “debt financed” “income” away from other “income” that is “exempt from” the UBIT;[4] permit the addition of an optional mechanism to permit an investment manager to control the allocation of “future profits” to and among various “participating investors”, without violating the “prohibited transaction” rules in 26 USC 408 and 26 USC 4975;in order to increase the ability of “favored investors” (e.g., IRAs, other retirement plans and accounts, other “tax exempt” entities, and other “favored investors”), to accumulate substantial sums, without violating the “prohibited transaction rules” in 26 USC 408 and 26 USC 4975.