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Forming Qualified Opportunity Funds, Stafford Presentation - Qualified Opportunity Zones: New Tax Incentives for Commercial Real Estate and Other Investments

Qualified Opportunity Zones: New Tax Incentives for Commercial Real Estate and Other Investments Deferred Capital Gains and Tax Abatement Under New IRC Section 1400Z; Forming Qualified Opportunity Funds

A live 90-minute CLE webinar with interactive Q&A

This CLE webinar will give real estate, venture capital, and finance counsel a working knowledge of “Qualified Opportunity Zones” and “Qualified Opportunity Funds” created under the new tax law. The panel will discuss capital gains deferral, tax free treatment of long-term appreciation, and other tax benefits associated with making real estate and other business investments in qualified opportunity zones, eligibility requirements, the process for getting fund approval, fund formation, and more.

Tax reform legislation created a significant new economic development tool, “Qualified Opportunity Zones,” that encourages private investment in businesses, projects and commercial property located in designated census tracts. New IRC Sections 1400Z-1 and 1400Z-2 will allow real estate and other investors to defer current capital gains, significantly increase basis in long-term investments, and qualify for tax abatement by reinvesting capital gain proceeds in “Qualified Opportunity Funds.”

Governors from all states have now designated areas as Qualified Opportunity Zones eligible for tax-advantaged investment for a period of 10 years. Treasury has now clarified the approval process for Qualified Opportunity Funds is on a self-certification basis by funds on initial tax return filings.

To leverage the tax benefits of the program, a taxpayer must reinvest capital-gain proceeds in a Qualified Opportunity Fund within 180 days from the date of the sale or exchange of a capital asset. Further, the Qualified Opportunity Fund must maintain at least 90% of assets in “Qualified Opportunity Zone property,” directly or through equity or partnership holdings. Counsel must grasp structuring requirements to qualify for, and preserve, these tax benefits through the life of an investment.

Listen as our authoritative panel analyzes requirements for investment in Qualified Opportunity Zones, and how to structure Qualified Opportunity Funds to obtain the capital gain deferral and step up in basis provided under the new tax law. The panel will also discuss twinning of fund investments with new markets and other existing tax credits.


I. Qualified Opportunity Zones—what are they?

A. History

B. Creation under tax reform bill - designation by the states

C. Types of investment -- commercial real estate and operating businesses

II. Qualified Opportunity Funds—eligibility requirements, formation, self-certification

III. Tax incentives to invest in Qualified Opportunity Funds/Zones

A.  Deferral of short- and long-term capital gains

B.  Step up in tax basis

C.  Tax abatement of all post-investment appreciation

IV. Pairing Qualified Opportunity Zone investments with new markets tax credits, low-income housing tax credits, renewable energy investment and production tax credits, and other tax incentive programs

V. Advanced Structuring Considerations


The panel will review these and other critical issues:

• What are Qualified Opportunity Zones, and how are they determined?
• What are the tax deferral and tax abatement features of qualifying investments?
• How are Qualified Opportunity Funds approved, and what is the preferred entity structure?
• When must the reinvestment of capital gains be made, and how long must it be held, to qualify for the tax benefits?
• Timing Issues and Strategies for investment in Qualified Opportunity Funds
• Substantial Improvement Test
• What significant questions are subject to further Treasury guidance or proposed Treasury Regulations?
• How might Qualified Opportunity Funds be used in real estate development and finance, and can they be twinned with other tax incentives?