Comment Letter to Massachusetts Department of Revenue on its Working Draft Directive for Professionally Managed Funds

MFA filed a comment letter with the Massachusetts Department of Revenue in response to the Departments draft directive on the factors to determine whether a professionally managed fund is engaged in the trade or business of trading securities. In our letter, we encouraged the DoR to: (1) establish a non-exclusive list of factors that the Department will consider in determining whether a professionally managed fund is a trader fund; (2) clarify that a fund would not need to meet all of the listed factors to be deemed a trader fund; and (3) delete the safe harbor and apportionment tests in the directive because each is based on a holding period test, which can be misleading in analyzing the activities of a professionally managed fund and because a holding period test inappropriately focuses the analysis on one particular factor rather than an analysis of all relevant facts and circumstances.