Sovereign Wealth Co-Invest Structuring

Check eligibility for Section 892 exemptions based on proposed investment parameters.

Entity Type

Does the investing entity engage in ANY commercial activity globally?

This applies to the specific entity holding the asset.

Target Asset Type

Section 892 Fragility

Section 892 of the US Internal Revenue Code exempts income derived by foreign governments from US investments (stocks, bonds) from US taxation.

However, if a Controlled Entity engages in ANY commercial activity anywhere in the world, it loses its Section 892 exemption for all its investments. Therefore, SWFs must construct careful "silo" structures to isolate passive investments from commercial activities.

No-JS Fallback Form

function swfTool() { return { entityType: 'controlled', commercialActivity: 'no', assetType: 'stocks', calculated: false, status: '', statusMessage: '', checkEligibility() { if (this.entityType === 'private') { this.status = 'fail'; this.statusMessage = 'Private entities are not eligible for Section 892 exemptions under any circumstances.'; } else if (this.commercialActivity === 'yes' && this.entityType === 'controlled') { this.status = 'fail'; this.statusMessage = 'A controlled entity that engages in commercial activity anywhere in the world loses its Section 892 exemption entirely.'; } else if (this.assetType === 'operating' || this.assetType === 'real_estate') { this.status = 'warning'; this.statusMessage = 'Income from commercial activities (like operating businesses) or direct real estate is generally not exempt under Section 892, even if the entity itself qualifies. A corporate blocker may be required.'; } else { this.status = 'pass'; this.statusMessage = 'This structure appears eligible for Section 892 exemption on passive income (dividends, interest, capital gains on stock).'; } this.calculated = true; }, get statusTitle() { if (this.status === 'pass') return 'Eligible (Passive Income Exempt)'; if (this.status === 'warning') return 'Structurally Deficient (Blocker Required)'; return 'Not Eligible (Exemption Lost)'; }, get statusClass() { if (this.status === 'pass') return 'border-green-500 bg-green-900/20 text-green-400'; if (this.status === 'warning') return 'border-yellow-500 bg-yellow-900/20 text-yellow-400'; return 'border-red-500 bg-red-900/20 text-red-400'; } } }

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