Ambridge’s “Trade or Business” Tax Insurance Policy has been designed to address the tax-related exposures faced by foreign persons or entities when investing in privately placed investment funds, venture capital funds and hedge funds with U.S.-based advisors or managers, or when engaging in a limited transaction that carries the risk of characterization as being “engaged in a U.S. trade or business” (“ETB”). The determination of whether or not a specific transaction or investment subjects a foreign person or entity to being characterized as ETB for U.S. income tax purposes is “facts and circumstances” based. While the existing guidance or legal precedents may not provide foreign investors or entities with sufficient comfort as respects U.S. tax risk, the tax insurance coverage that is described in this product update may provide the certainty they require.