The $700 billion “bailout bill” signed into law on October 3, 2008 contains changes to the U.S. tax code that will effectively eliminate the ability of U.S. hedge fund managers to defer paying tax on fee income from their offshore hedge funds.  The new law, enacted as part of the same bill that contained the Emergency Economic Stabilization Act of 2008, will impose U.S. tax on a current basis on deferred compensation from offshore entities that are not subject to U.S. tax or to a comprehensive non-U.S. income tax, with the principal target being U.S. managers of offshore hedge funds.  In a guest article, Kirkland & Ellis partner Andrew Wright provides a lucid analysis of the relevant provisions of the new law.