Photo of Scott O'Sullivan “A lot of interesting federal, state/local and foreign tax issues start piling up early on,” writes O’Sullivan.

GARDEN CITY, NY—It’s the kind of scenario managing members and/or CFOs of investment entities may dread: Just when you thought you’d highlighted a solid investment opportunity for investors, the calls start coming in—and they’re not sounding good.

You’re in the business of buying loans (potentially in distress) from banks that want them off their balance sheet, and for a time, you’ve successfully identified loans that could yield a favorable return on investment; any payments from the original borrower, north of your entity’s loan purchase, have been a win.

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