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How can a Qualified Opportunity Fund sell assets and reinvest the proceeds without causing its investors to owe tax?

I want to create an Opportunity Fund in an Opportunity Zone. I am wondering if I sell the assets of the fund in the future before all investors exit, and reinvest the proceedings to create a new Opportunity Fund, will these investors be impacted?

  • December 26, 2018

    The Tax Cuts and Jobs Act of 2017 created Qualified Opportunity Zones (QOZ) as an incentive to encourage development and investment in state-nominated, economically-distressed communities. Earlier this month, you may have read about the potential federal tax benefits to this program. The BPM SALT team would like to remind you there are possible state tax benefits as well. From a SALT (state and local tax) perspective, states may or may not have conformed to the Tax Cuts and Jobs Act of 2017 and therefore could have a different treatment on the gain under the federal program.

  • Farazad Investments
    December 26, 2018

    Strongly recommend to connect with a tax advisor.

  • Seyfarth Shaw LLP
    December 26, 2018

    The question that you pose, while seemingly straightforward, is actually a complex tax-related question.