Opportunity Zones: New Guidance [Video]

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The Tax Cuts and Jobs Act in 2017 established the newest tax deferral fund type. Opportunity Zone Funds have created new possibilities in the commercial real estate and venture capital industries. The goal of the law was to foster development and investment in economically distressed areas. State governors designated some 8,700 zones across the country. A Qualified Opportunity Fund (QOF) investor may be able to defer, reduce, or even eliminate some capital gains taxes depending on the circumstance. One aim of the law was to give a sense of urgency to likely investors to generate as much investment, as quickly as possible. Lawmakers overarching goal is to raise up the level of employment and economic activity in the zones. Advisors who may have a client looking to mitigate federal capital gains taxes, especially those who have a capital gain event in the upcoming year, can find value in understanding Opportunity Zones.

The IRS, on April 17th of this year, clarified opportunity zone fund requirements. This is the second clarification that has come out this year. Some investors were originally skeptical about QOFs due to some of the opacity surrounding the requirements. Having these questions clarified likely will alleviate many investor concerns.

The new guidelines and guidance will likely encourage more investment in opportunity zones. Staying informed and current is vital.  Advisors need to understand the rules and guidelines to help their clients understand the opportunities in OZs. Sponsors need to understand the rules to ensure their QOF remains within the guidelines. Investors need to understand the potential benefits and requirements of OZs. Many people hope that the communities in Opportunity Zones will become more economically vibrant because of this new program. Concerned citizens should care about these communities wellbeing, and if positive changes occur, that will be a reason to celebrate.

This publication is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. It does not provide that necessary customization of  advice, tailored to a client, which would be provided by an accountant or tax lawyer.  The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of VENTURE.co Holdings, Inc. This release contains “forward-looking statements.” There can be no assurance of their accuracy. This press release is not an offering.

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