Date: November 25, 2025
OVERVIEW
After the Receiver was appointed, it was determined that although Pride of Austin High Yield Fund I LLC (“POAHYF”) distributed certain Schedules K-1 to investors, POAHYF did not actually file tax returns with the Internal Revenue Service (“IRS”) for many years. The IRS has required the Receiver to prepare and file all applicable federal tax returns for tax years 2020 through and including 2024 (and beyond). To that end, the Receiver engaged an independent third-party accounting firm to complete the preparation of POAHYF federal tax returns including the corresponding Schedules K-1 for investors in POAHYF for tax years 2020 through and including 2024, which have been circulated by the Receiver. These Schedules K-1 reflect adjustments based on the Receiver’s forensic accounting, which identified the Fund as having operated in a Ponzi-like manner prior to the Receivership, and may defer materially from Schedules K-1 you have received previously.
The Schedules K-1 were distributed to investors via email in September. If you have not received your Schedule K-1, please contact Erik White at ewhite@harneypartners.com.
The purpose of this notice is to address common questions received from investors regarding earlier tax years and the receipt of Schedules K-1.
1. Will Schedules K-1 be Issued for Years Prior to 2020?
No. The Receiver will not issue Schedules K-1 for any tax years before 2020.
The IRS only required the Receiver file returns for tax years 2020 and after.
At the present time, the Receiver does not intend to file tax returns or amendments for any tax years prior to 2020. Due to statute of limitations issues, it would not be beneficial to investors for the Receiver to incur the costs required to file additional returns for tax years prior to 2020 as investors are unlikely to be able amend those returns and the Receiver is not required by the IRS to file these returns.
2. What Should Investors Do with the Schedules K-1?
Each investor’s tax situation is unique. Investors should consult their personal tax advisors to determine the appropriate treatment of the Schedule K-1, including whether to file amended personal or entity tax returns.
The Schedules K-1 reflect adjustments to income, losses, and capital balances based on the Receiver’s reconstruction of actual fund activity and asset base. These changes may affect previously reported taxable income or capital account balances shown on investor’s previously issued Schedules K-1.
3. How Should Investors Report Losses in Light of the Ponzi-Like Investment Scheme?
The Receiver’s investigation has confirmed that the Fund operated as a Ponzi-like investment scheme prior to the Receivership.
While the Receiver cannot provide individual tax advice, the Receiver strongly encourages investors to consult with their tax advisors regarding the tax treatment of any losses under the Internal Revenue Code and any IRS issued guidance for such Ponzi-like investment schemes, which may provide applicable guidance.
Investors should discuss with their tax professionals whether they may be eligible for such any such relief based on their individual circumstances and the facts of the receivership.
4. Will the Receiver Provide a Letter or Certification to the IRS?
The Receiver does not issue and the IRS does not require a specific certification that an investment was a Ponzi scheme. Instead, taxpayers rely on publicly available documentation—such as court orders, the Receiver’s reports, and other filings—to substantiate a theft loss deduction or other tax treatment.
5. Where Can I Find Updates or Supporting Information?
All official communications, court filings, and tax-related updates are available on the Receivership website at: prideofaustinreceivership.com Investors are encouraged to monitor the site periodically for additional guidance or supporting materials.
Thank you for your continued patience as the Receiver completes the accounting and tax work necessary to ensure fair and accurate reporting for all investors.
