Hedge funds are usually established as Delaware limited liability companies (LLC) or Delaware limited partnerships (LP).  In addition to providing investors with a certain amount of liability protection (generally to the extent of their investment), these vehicles are also more tax efficient than other structures like corporations because LLCs and LPs can be taxed as partnerships.  Unlike a corporation which is subject to double taxation (that is, tax at both the corporate level and the investor level), a partnership is only subject to tax at the investor level. Continue reading →