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there are no miscellaneous itemized deductions. Thus, assuming that the foreign feeder is a passive
foreign investment company (PFIC), if the US high net worth shareholder is able to make the "qualified
electing fund" election, the net income the investor would be required to report on his federal income
tax return would be calculated after deducting all of the corporation's expenses, including management
fees and investment expenses.

2. Non-US Partner's Gain on Sale of Partnership Interest may be Taxable as US Trade or Business
Income; New Withholding Requirements apply to the Purchaser or the Fund

The Tax Act specifically provides that gains realized by a non-US partner on a sale or exchange of a
partnership interest will be treated as effectively connected US trade or business income ("ECI") to the
extent that such partner would have been allocated ECI had the partnership sold all of its assets. This
provision is consistent with the IRS position in Revenue Ruling 91-32, and overrules a recent Tax Court
case which had rejected the position taken in such IRS Ruling and instead held that since a partnership
interest is treated as a capital asset, the foreign person's gain on its sale could escape US income taxation
as a non-business capital gain.

To the extent that a partnership has any ECI-generating assets (including US real property interests), a
seller of a partnership interest will have to provide a certificate that it is not a foreign person, and in the
absence of such a certificate a purchaser (which could include the fund) will be required to withhold
10% of the gross purchase price. Further, the Tax Act provides that if the purchaser does not withhold,
the partnership is required to withhold on distributions to such purchaser to cover the withholding. The
Tax Act provides that the new withholding obligation for purchasers is effective for sales or other
dispositions of partnership interests after December 31, 2017.

3. New Limitation on Deduction of Net Interest Expense

Under prior law, subject to some restrictions and limitations, business interest paid or accrued by a
business was fully deductible. For taxable years beginning after December 31, 2017, the Tax Act limits
the deduction for "net business interest" expense for every type of business, regardless of entity form,
to 30 percent of adjusted taxable income. Business interest paid or accrued after the effective date on
indebtedness, including debt that was incurred prior to the effective date of the Tax Act, is subject to
this limitation.

The term business interest does not include investment interest described in Code section
163(d). Operating companies, such as management entities, and investment funds that are engaged in
a business and have outstanding indebtedness could be subject to such deduction limitation. For this
purpose, "adjusted taxable income" is determined at the entity level for partnerships, and is similar to
EBITDA (i.e., net earnings before deducting interest expense, taxes, depreciation and amortization) for
taxable years 2018 through 2021. A more restrictive 30% of EBIT limitation (net earnings before
deducting interest expense and taxes) applies for 2022 and later years.

Certain taxpayers are exempted for the new interest deductibility limitation, including small businesses
with average annual gross receipts of $25 million or less for the three prior taxable years, as well as real
estate businesses that elect out of such limitation. The Conference Committee Report on the Tax Act
clarified that interest paid on shareholder loans by a blocker corporation is "business interest" that is
subject to this new limitation. Blocker corporations for a lending business would have business interest
income, which reduces the effect of this new limitation on net business interest expense (i.e., deductible
business interest expense in excess of business interest income).

4. Deemed Repatriation Tax

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