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Structure business development for tax benefits

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People working in call centerA venture-like investment vehicle, a business development company (BDC) helps businesses raise funds for job growth. They supply capital and financing through a variety of mechanisms beyond the scope of venture capital and private equity funds. BDCs offer a highly liquid way to access the emerging growth market.

BDCs can also enjoy the taxation benefits of registered investment companies (RICs), after weighing the structure’s pros and cons. RICs have advantages in expense deductibility, and state tax exceptions and limitations. Drawbacks include investment restrictions in qualifying income, asset diversification and income distribution.

Exploring the potential of a BDC is worthwhile. “The opportunity to tap a broader base of new investors and a much larger pool of capital is compelling,” explained Grant Thornton Tax Services Partner Robert Dunn. “One key is to establish and maintain a structure and investment strategy that allows the BDC to be taxed favorably as an RIC.”

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Contact

Robert Dunne
Partner, Tax Services
T +1 215 701 8850

Heidi Ryan Patton
Senior Manager, Tax Services
T +1 215 656 3071

Sang Lee
Experienced Manager, Tax Services
T +1 215 531 8778