The new federal Qualified Opportunity Zones (QOZ) program, enacted as part of the 2017 Tax Cuts and Jobs Act, provides taxpayers with attractive tax incentives to invest in economically disadvantaged communities spread across all 50 states through private sector investment vehicles known as Qualified Opportunity Funds (QOFs).
More than 8,700 census tracts have been certified as opportunity zones. With an estimated $6 trillion in unrealized capital gains held by investors, the potential funding of QOFs and the economic impact on these communities is expected to be enormous. Qualifying investments in QOZs, which require at least 90 percent of the invested capital to be in assets designated as “QOZ property” may be in real estate or in businesses operating within designated QOZ areas.
Depending on the length a QOZ investment is held, it is potentially triple tax advantaged with:
- Deferral of tax on eligible capital gains from the original investment until the earlier of a disposition of the interest acquired in a QOF or December 31, 2026;
- A permanent exclusion of 10 percent of the initially invested capital gains after the investment is held for at least 5 years, and 15 percent if held for at least 7 years; and
- A step-up in basis of the QOZ property to fair market value on the date it is sold or exchanged if held for at least 10 years, which means that post-investment appreciation in the property may be permanently excluded from tax.
Although the potential tax benefits of opportunity zones are well-defined, the rules governing how to ensure that an investor qualifies for these benefits are still evolving. It remains critically important that investors contemplating, entering into, or already invested in QOZ transactions are kept apprised of new developments that could impact them.
Chamberlain Hrdlicka’s Qualified Opportunity Zone team is well-versed in the technical nuances of how to qualify for the favorable tax incentives of the QOZ program, including creative structuring alternatives for forming opportunity funds under a variety of facts and circumstances, even as the opportunity zone rules continue to evolve. Our QOZ team also brings valuable insights on state and local tax issues as states contemplate how to respond to the new law on such important questions as the apportionment of gain and potential nexus issues.
For an interactive map of QOZ tracts throughout the United States, please click here.
- Christopher Steele provides insights on Qualified Opportunity Zones at LiveXchangeOctober 8, 2020
- Christopher Steele is a presenter at the 2020 LiveXchange Virtual EventBusiness Facilities, September 30, 2020
- The Legal Intelligencer published a profile of Phil Karter for receiving the Lifetime Achievement recognition for 2020September 24, 2020
- Two Chamberlain Hrdlicka Attorneys Named to the Legal Intelligencer's 2020 Professional Excellence ListPhil Karter and Kevin Sweeney Named to the Legal Intelligencer's 2020 Professional Excellence ListJune 3, 2020
- Sebastian Chain, Justin VandenBout and Jaime Vasquez named 2020 Rising StarsMarch 10, 2020
- Chamberlain Hrdlicka 2nd Annual San Antonio Tax and Business Planning Seminar - November 6, 2019 at Wyndham San Antonio RiverwalkNovember 6, 2019
- Main Line Today, October 10, 2019
- “Comparing 1031 Exchanges to Opportunity Zones (1031 v. 1400z-1 and 1400z-2)” by Stephanie Friese and Christopher Steele published by Georgia Society of CPAsAugust 12, 2019
- Opportunity Zone Article in Houston Business Journal with Phil Karter and Katherine Noll, Co-Chairs of Qualified Opportunity Zones PracticeAugust 5, 2019
- August 1, 2019
- The Legal Intelligencer
- The Legal Intelligencer
- The Supreme Court last year allowed states to tax online retail sales. What kinds of sales, and how to tax them, remains a complicated question.National Journal, April 25, 2019
Seminars & Presentations
- Wyndham San Antonio Riverwalk, November 6, 2019
- Webinar on Nuts and Bolts of taking the Opportunity Zone Plunge with Brian Lovett, Thomas Fleming and Phil KarterSeptember 5, 2019
- La Posada Hotel, July 30, 2019
- Opportunities v. Exchanges - Eenie, Meenie, Miney, Moe ...Cobb Galleria, 2 Galleria Parkway, Atlanta, GA 30339, July 10, 2019
- Chamberlain Hrdlicka San Antonio Tax Forum - May 29, 2019Club Giraud, 707 N. St. Mary's Street, San Antonio, Texas 78205, May 29, 2019
- Chamberlain Hrdlicka May 21, 2019 West Loop Tax Forum - HoustonianThe Houstonian - 111 North Post Oak Lane, May 21, 2019
- Chamberlain Hrdlicka May 14, 2019 West Houston Tax Forum - Marriott WestchaseHouston Marriott Westchase, 2900 Briarpark Dr., Houston, Texas 77042, May 14, 2019
- Avoiding State Sales Tax Traps and Compliance Challenges, Navigating Audit IssuesMarch 21, 2019
- Chamberlain Hrdlicka San Antonio Tax Forum - March 12, 2019Club Giraud, 707 N. St. Mary's Street, San Antonio, Texas 78205, March 12, 2019
- New Orleans, LA, March 12, 2019
- Home Ownership Center, March 4, 2019
- Article by Jennifer Karpchuk on “How Can I Balance COVID-Related Family Pressures With My Work?”The Legal Intelligencer, October 8, 2020
- Tax Blawg, November 6, 2019
- Tax Blawg, July 30, 2019
- Tax Blawg, June 25, 2019
- Tax Blawg, May 29, 2019
- Tax Blawg, May 21, 2019
- Tax Blawg, May 14, 2019