What is an Opportunity Zone
• As part of the Tax Cuts and Jobs Act of 2017, opportunity zones were created to encourage private investment in low-income and distressed communities across the United States.
• Each governor was asked to nominate a certain number of census tracts that qualify as “low income communities”. The Department of Treasury then designated Opportunity Zones in a percentage of the nominated zones in each state.
• Investors that wish to defer capital gains recognized upon a sale or exchange of an asset to an unrelated party on or prior to December 31 can invest the capital gain into a “Qualified Opportunity Fund” (QOF)
• Any eligible taxpayer (any taxpayer that recognizes capital gain for federal tax purposes), including individuals, C corporations, or partnerships can invest in an Opportunity Zone.
• Eligible gains must be treated as: a capital gain for federal income tax purposes, recognized no later than Dec. 31 2020, recognized as a result of a sale or exchange engaged by the tax payer with an unrelated person.