Taxation for hedge fund

How long term capital gains and short term capital gains are passed to members from LLC/LLP??? Very important question from tax saving point of view.
LLCs or LLPs are not taxed as separate entities. profits are passed on to members. So basically in our ideal hedge fund structure. Following will be flow of profits.

Hedge Fund LLP -> Managing LLC -> Owners/managers of structures

At the end of year LLC (or LLP) files form 1065 where they report their profits or losses. Normal operational income is filed separately from dividend or long term capital gains income on this form. Long capital gains/Dividends filed on separate schedule D form. Also LLC sends form K-1 to each member prorated based on their share of ownership. This K-1 form has normal income and capital gain income separately mentioned. Accordingly member files his personal return using this form. For normal income tax rate upto 35% and for long cap gain tax rate is upto 15%.

LLC's day-to-day expenses can be deducted from short trade gains or other operating profits (consultancy etc.)...Income from this will be considered as normal operating income based. This will get added to member's income from other sources and will decide his tax bracket (0% to 35%). Other profits from dividends or long gains will be treated based on long term tax rate and wont affect members tax bracket.

Taking advantage of long term tax benefit is very very crucial point. All long term investor use 'tax benefit' as their strongest weapon against hedge funds. All Warrent Buffet/Graham theories are majorly based on this factor. Frequent fast trades may not be as profitable as long term gains because of tax differences, trading cost and resource requirements.
Well in my opinion, both can be profitable if used on different instruments with different strategies and at different times outcomes are different. Dont want to discuss strategies here.