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Tax Blawg

Tax Talk for Tax Pros

Introduction

Welcome to TaxBlawg, a resource from Chamberlain Hrdlicka for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention.

The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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2018 CAPITAL GAIN DEFERRAL OPPORTUNITY

2018 Capital Gain Deferral Opportunity through June 29, 2019

An important deadline is approaching on June 29, 2019 for taxpayers looking to defer 2018 capital gains by investing in a Qualified Opportunity Zone (“QOZ”).  Investments of capital gains in a Qualified Opportunity Fund (“QOF”) generally require the investments to be made within 180 days from the date(s) of sale giving rise to capital gain. However, the 180-day period is extended for capital gains earned through a partnership or pass-through entity.  This exception to the 180-day contribution rule for pass-through entities can also potentially salvage a deferral of gains from a failed like-kind exchange under section 1031 provided the failed exchange involved property owned by a pass-through entity. 

For capital gains earned from a pass-through entity in 2018, the 180-day period commences December 31, 2018, meaning that such gains can still qualify for deferral if they are contributed to a QOF by June 29, 2019.  Because the QOZ rules allow cash or cash equivalents to be held in a QOF for up to six months, taxpayers still contemplating a way to defer 2018 capital gains have the option to set up a QOF and figure out how to invest those funds in a QOZ thereafter. If it turns out thereafter that the funds are never invested in a qualifying QOZ business, taxpayers on extension for 2018 will simply file their Schedule D gains without claiming the deferral on Form 8949.  (Conversely, taxpayers who already filed their 2018 returns reporting capital gains who want to take advantage of the QOZ deferral opportunity by June 29th will have to amend their returns.)  On the other hand, taxpayers who follow through with qualifying investments in QOZ businesses will be able to defer their 2018 gains and potentially derive the other significant tax advantages of QOZ investments.

Two steps are required to take advantage of this opportunity.  Step one will require the immediate formation of a limited liability company with two or more members.  Step two will require setting up a bank account for the LLC into which the qualifying capital gain funds must be deposited by the deadline.

For more information and assistance, please immediately contact any member of Chamberlain’s Opportunity Zone team

  • Shareholder

    Katherine Noll advises clients in federal and multi-state income tax matters, including business transactions, tax compliance, controversy, executive compensation, fringe benefits, and employee benefit plan matters ...

  • Associate

    Nima Farzaneh concentrates his practice primarily on assisting businesses with domestic and international tax planning and corporate matters, including entity formation and governance, finance, reorganizations, mergers and ...

  • Shareholder

    Philip Karter specializes in tax controversy and tax litigation matters.  In his 35-year career, Mr. Karter has litigated Federal tax cases in the United States District Courts, the United States Tax Court and the United States Court ...