Tax Considerations

Please contact us if you have any questions on the following. Happy to help in any way possible, but please note we are not financial or tax advisors.

Legal Structure

• Venture Club formed a Series LLC pursuant to Section 18-201 of the Delaware Limited Liability Company Act (the “Act”) on July 26, 2022, called Venture Club Master Series, LLC (“Master LLC”). The sole member and manager of the Master LLC is Venture Club Inc. As permitted by the Act, its Certificate of Formation and its Operating Agreement, the Master LLC has established individual series LLC’s (“Series LLC”) which hold separate assets, keep separate books and are composed of individual members.

• Venture Club has launched a platform that permits holders of certain assets, such as securities instruments like Simple Agreements for Future Equity (“SAFE”) and Simple Agreements for Future Tokens (“SAFTs”), to assign or sell such assets to a Series LLC, currently managed by Venture Club, as permitted by such instrument and subject to the consent of the issuer. Each Series LLC is structured as a special purpose vehicle (“SPV”), established for the sole purpose of holding a single asset.

• Venture Club’s Series LLC’s are functionally designed as SPV’s, or single purpose entities, with a single asset to be transferred to the SPV that is ringfenced from the claims of any other entity, including any new series created under the Master LLC. Each Series LLC has its own operating agreement, members and classes of membership interests.

• Currently, the manager of each newly formed Series LLC is Venture Club. The manager’s role is to administer the necessary business functions of the Series LLC in order to meet all legal compliance requirements.

• The Venture Club platform provides exclusive access to private placement investment opportunities in SPV’s for pre-verified accredited investors pursuant to Regulation D, which provides an exemption from registration with the SEC.

Tax Considerations

• Venture Club Series LLCs are Protected Series, and elected as Partnerships for tax purposes.

• Series LLC are taxed as a pass-through entity. See more on this here.

• Some international investors may want to exercise cautious participating with Series LLCs! See below:

Asset country	Investor country	Impact
US	US	pass-through
US	International	tax consequences
International	Any	pass-through

• Tax consequences may arise due to:

  1. Witholding tax is applicable for foreign holders for Effectively Connected Income (ie, income from a US source).

  2. There could be a risk of double taxation within your country if your country does not recognize LLCs as a legal entity (see for example, Canada).

• There are ways to mitigate taxes for foreign investors under this situation, and it might be helpful to talk to a tax advisor to understand what is the best way to do this.

Reporting

• On a yearly basis, NFT holders receive a K1 for their single asset SPVs if there is any economic activity associated with that entity.