Private investment funds seeking to return capital to investors may want to consider in‑kind distributions, which are generally tax-free for U.S. federal income tax purposes. In addition, in‑kind distributions may make sense when the investment horizon extends beyond the term of a closed-end fund or when investors have divergent views as to whether to continue with an investment or desire liquidity. In those cases, the fund manager may move an asset in‑kind to a new continuation vehicle, offering the choice of liquidity to those investors seeking an exit or the opportunity to continue with the investment. In a guest article, Seward & Kissel partners Brett R. Cotler, David R. Mullé and Sonita M. Bennitt provide an overview of the tax and regulatory considerations when making in‑kind distributions, including new tax reporting forms, valuation considerations and Rule 144 concerns. For more from Cotler, see “Tax Court Ruling Is a Setback for Fund Managers Structured As Limited Partnerships” (Feb. 8, 2024).