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Posts in Opportunity Funds.

Some of the highlights of the first round of proposed regulations released on October 19, 2018 in conjunction with Revenue Ruling 2018-29 are as follows:

  • Capital Gains: The regulations take the position that only capital gains for federal income tax purposes are eligible to be invested in a Qualified Opportunity Fund (QOF). Thus, gains such as depreciation recapture are not eligible, while certain Section 1231 gains are likely to be eligible.
  • Retention of Rate: Capital gains invested in a QOF will retain the rate at which the gains were to be taxed if not for an investment in a QOF. This means that when the deferral of the initial tax on gains ends (earlier of sale out of a QOF or December 31, 2026), the rate of tax on the gains will be the same at deferral, i.e. short-term capital gains invested in a QOF will eventually be subject to the short term capital gain rate when deferral ends.

This is the next post in a series of articles diving into the new “Opportunity Fund” program. In previous posts, we described the general framework for the new Opportunity Fund program, the tax benefits to taxpayers who invest in Opportunity Funds, and how the funds work. Now, we will answer some of the more common questions we have been receiving regarding the program.

Q: How does an Opportunity Fund become eligible to be an Opportunity Fund?

A: It is pretty simple. There are two general requirements.  First, an Opportunity Fund must be organized for the purpose of investing in Qualified Opportunity Zone Property.

This is the third post in a series of articles diving into the new “Opportunity Fund” program. In our first post, we described the general framework for the new Opportunity Fund program which you can find here. In the second post, we discussed the tax benefits to taxpayers who invest in Opportunity Funds. Now, let’s look at the funds themselves.

What are Qualified Opportunity Funds?

Qualified Opportunity Funds are investment conduits that deploy equity capital to specific types of property which are located in Qualified Opportunity Zones. Sounds simple enough! Let’s unpack this and keep track of the definitions.

This is the second post in a series of articles wherein we will dive into the new “Opportunity Fund” program. In our first post, we described the general framework for the new Opportunity Fund program which you can find here

There are three tax benefits that investors in an Opportunity Fund can take advantage of, (i) deferral of gain from the sale of property, (ii) partial forgiveness of this gain, and most importantly, (iii) tax-free appreciation in the investment in an Opportunity Fund.

Gain Deferral

The first thing a taxpayer must do to take advantage of the first tax benefit is to invest the gain from the sale of property into an Opportunity Fund within 180 days of the sale.

This is the first feature in a series of articles wherein we will dive into the new “Opportunity Fund” program.

The recently passed Tax Cuts and Jobs Act (TCJA) is most widely known for changing corporate tax rates, limiting the mortgage interest and state deduction for individuals, and for providing the qualified business income pass-through deduction. However, the TCJA also created a significant new economic development program, “Qualified Opportunity Zones,” that encourages private investment in businesses, projects and commercial property located in zones in every state and in each U.S. territory.