Archive for Blake Christian

Updating Your Opportunity Zone Working Capital Safe Harbor Business Plan ( With Blake Christian Audio Podcast)

Updating Your Opportunity Zone Working Capital Safe Harbor Business Plan

Listen To This Audio Podcast On Opportunity Zones

The end of the COVID Emergency on May 11, 2023 marked a pivotal moment for Qualified Opportunity Zone Businesses (QOZB). These businesses funded by the first quarter of 2023 now have the opportunity to accurately update their Written Working Capital Safe Harbor Plans by September 8, 2023.

What is Working Capital Safe Harbor Plan?

Under Code Section 1400Z-2, a QOZB must keep less than 5% of its assets in “nonqualified financial property,” with reasonable working capital as an exception to this rule. Prior to April 12, 2021, QOZBs were granted the “Working Capital Safe Harbor” (WCSH) which allowed them to hold any amount of working capital for 31 months, provided they had a well-crafted Written Plan and a solid cash-flow analysis showing how the OZ funds will be invested. All this was aimed at meeting the semi-annual 70% QOZB qualified asset test.

However, the Regulations did not address situations during the COVID Emergency, where the original Written (Business) Plan became difficult or impossible to implement due to the ongoing crisis.

What Updates were Made to the Working Capital Safe Harbor Plans?

Have a question about Opportunity Zones? Contact Blake Christian.

Written by | Posted in Opportunity Zone Update • Safe Harbor Business Plan

Updating Your Opportunity Zone Working Capital Safe Harbor Business Plan

Updating Your Opportunity Zone Working Capital Safe Harbor Business Plan

The end of the COVID Emergency on May 11, 2023 marked a pivotal moment for Qualified Opportunity Zone Businesses (QOZB). These businesses funded by the first quarter of 2023 now have the opportunity to accurately update their Written Working Capital Safe Harbor Plans by September 8, 2023.

What is Working Capital Safe Harbor Plan?

Under Code Section 1400Z-2, a QOZB must keep less than 5% of its assets in “nonqualified financial property,” with reasonable working capital as an exception to this rule. Prior to April 12, 2021, QOZBs were granted the “Working Capital Safe Harbor” (WCSH) which allowed them to hold any amount of working capital for 31 months, provided they had a well-crafted Written Plan and a solid cash-flow analysis showing how the OZ funds will be invested. All this was aimed at meeting the semi-annual 70% QOZB qualified asset test.

However, the Regulations did not address situations during the COVID Emergency, where the original Written (Business) Plan became difficult or impossible to implement due to the ongoing crisis.

What Updates were Made to the Working Capital Safe Harbor Plans?

Have a question about Opportunity Zones? Contact Blake Christian.

Written by | Posted in Opportunity Zone Update • Safe Harbor Business Plan

Tax Intelligence Report: Leading Tax Partner Blake Christian

Tax Intelligence Report: Leading Tax Partner Blake Christian

This article is the first in a series of tax professional profiles written and distributed under The Tax Intelligence Report. This is version 2.0 of this popular tax professional profile series. The purpose of the Tax Intelligence Report is to introduce extraordinary tax professionals and their impact on business and taxpayers. Knowing the high-level of technical competence of the tax professionals profiled through this series is valuable to taxpayers who need this expertise. The tax professionals profiled in The Tax Intelligence Report have tax expertise that has been proven as extraordinary in the world of tax experts.

As an internationally known retained executive tax search professional who has identified thousands of technically gifted tax experts for organizations and taxpayers worldwide, it is my pleasure to introduce readers to Blake Christian, Tax Partner of HCVT in Park City, Utah. Blake Christian is a highly skilled tax expert known nationally as a top 10 Opportunity Zone Influencer. Blake and his team have advised hundreds of investors and professionals regarding the complexities of formation, operation, semi-annual testing and restructuring of QOFs and QOZBs. He is the expert that Partners in other public accounting firms outsource specialty expertise to structure qualified opportunity zones for their own clients. Blake and the HCVT OZ Team have been involved in advising and the formation of over 100 Qualified Opportunity Funds and over 125 Qualified Opportunity Zone Businesses.

Blakes also specializes in holistic tax planning for businesses and their equity holders, profit improvement, economic development, state enterprise zone, Federal empowerment/ renewal community/ gulf opportunity and Indian Tribal Lands Tax Credits.

Blake has years of experience providing tax consulting and compliance services to clients that include multinational, publicly traded corporations, family offices, as well as closely held owner-managed businesses. Here is our interview with Blake Christian.

Kat Jennings: How did you begin your career in tax?
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Written by | Posted in Opportunity Zone • Opportunity Zone Benefits • Opportunity Zone Investment

Tax Strategies For Lottery Winners May Surprise You!

BLAKE CHRISTIAN- Tax Strategies For Lottery Winners May Surprise You!

Lottery fever remains at a high level lately, thanks in part to jackpots that sometimes exceed $1 billion, including the $1.334 billion Mega Millions winning ticket sold in July to individuals in Illinois, who claimed the prize via an anonymous partnership. They opted for the lump-sum amount.

While those winners chose the lump sum, if a newly wealthy winner comes to you for advice about how to receive the windfall, we strongly recommend carefully evaluating the installment option before claiming the prize.

Installment vs. Lump Sum

Most lottery winners elect the lump-sum option, and their reasons for making this choice are often erroneous. Many believe that installment payouts stop if the winner dies. This is not true. Or they fear the state and/or lottery commission could go bankrupt before they are fully paid out. This is highly unlikely since the installment obligation is backed up by a “laddered” bond portfolio. Other concerns include higher tax rates and/or high inflation in the future — which are valid concerns that should be factored into the analysis.

Taking the lump-sum option on a multimillion-dollar prize is usually a poor decision, partly because winners will take a permanent net-present-value haircut of 30% or more on their payout, plus pay 100% of the tax in the first year of winning.

To explain further, the advertised winning amount is the pretax payout over several decades, often 30 years. By patiently waiting for their annual installments, the winner(s) will receive the full advertised winnings. By electing a lump sum, on the other hand, there will be a time-value-of-money discount, which generally falls in the mid-30% range but can be as high as 39%. (This discount decreases with larger prizes, since a smaller annual return is required to compound the lottery commission’s initial investment and increase to the full prize. Due to the record amount of the recent Mega Millions award, the actual discount rate on the lump-sum payout reportedly dropped to a record low of 17.65%, which may have factored into the Mega Millions jackpot winners’ decision to take the lump sum.)

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Written by | Posted in Blake Christian • Opportunity Zone Tax Advantages • Tax Strategies For Lottery Winners

Year End Tax Savings – Capital Gain Shelter, Four Year Tax Deferral And Tax-Free Appreciation

Year End Tax Savings - Capital Gain Shelter, Four Year Tax Deferral And Tax-Free Appreciation

OZ Funds allow taxpayers to defer federal long and short-term capital gains until April 2027.  In addition all appreciation accruing over a 10 year or more holding period escapes federal taxation.  Depreciation is also not recaptured for long-term holders.

MITmodular has an OZ Fund with commercial real estate and unique manufacturing operations that not only allows the deferral and tax exemption, but also generates bonus depreciation, tax credits and government grants.

MITmodular is an ESG company which designs and manufactures innovative and energy-efficient modular housing primarily out of re-purposed  shipping containers.  Their market includes: Accessory Dwelling Units (ADU’s), homeless housing, workforce housing, affordable housing, upgraded housing for mobile home parks, emergency housing as well as special event and retail uses.

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Written by | Posted in Opportunity Zone Benefits • Tax Credits And Government Grants

Enhancing Returns From Opportunity Zone Projects By Combining Federal, State, And Local Tax Incentives

Enhancing Returns From Opportunity Zone Projects By Combining Federal, State, And Local Tax Incentives

Enhancing Returns From Opportunity Zone Projects By Combining Federal, State, And Local Tax Incentives To Bolster Community Impact

Skeptics may call the federal Opportunity Zone (OZ) program a tax dodge for the wealthy, but there is strong bipartisan support for the program at the federal, state, and local levels. Furthermore, underserved communities (and the small businesses therein) could benefit from billions of dollars in new investments in long-term capital that they might not have received through conventional bank loans or government programs—especially given the current unique and challenging economy. The findings noted in this article are based on the authors’ presupposition that President Biden’s proposed tax increases have increased interest in the deferral and ultimate tax exemption aspects of the OZ program, and investment momentum is likely to continue for the foreseeable future.

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Written by | Posted in Opportunity Zone Projects • Tax Planning Strategies • TaxConnections

Greatest Tax Advantages Of Opportunity Zones

BLAKE CHRISTIAN - Opportunity Zones

An Opportunity Zone is a designation and investment program created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. The purpose of this program is to put capital to work that would otherwise be locked up due to the asset holder’s unwillingness to trigger a capital gains tax. MIT Modular is one of the leading authorities on Opportunity Zones.

The long-term benefits of the OZ program have not changed for investors, municipalities, and disadvantaged communities alike. We encourage you to recommend OZ investing for clients who have substantial gains from the sale of appreciated tech stocks, family businesses, real estate, stock portfolios, and even cryptocurrency and collectibles.

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Written by | Posted in Opportunity Zone Tax Advantages

Cryptocurrency Investors Turn To Opportunity Zones For Tax Relief

Tax Exempt Opportunity Zones

Reposted Valuable Article From 2021 On Crypto Currency

Whether you consider cryptocurrency an investment, a commodity, an alternative banking system or a form of legalized gambling, the rapid adoption and stunning recent volatility of cryptocurrencies has led to frenetic trading by investors. As a result of COVID-19 disruption, economic uncertainty and the entry of PayPal into the crypto-consumer market (allowing more than 300 million users to buy cryptocurrencies easily), the crypto market has seen a dramatic runup in the values of Bitcoin and many other cryptocurrencies.

Speculative crypto trading (as well as day trading of stocks) has made many crypto investors wealthy on paper. Their trading generated a substantial amount of short-term capital gains. The IRS has made it clear that Bitcoin and other cryptocurrencies should be treated as assets or intangible property — and not currency — since it is not issued by a central bank. This results in taxability virtually every time crypto is transferred or liquidated.

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Written by | Posted in Opportunity Zone Program

Top 10 Things You Need To Know About The Federal Opportunity Zone Program

Blake Christian - 10 Things To Know About Opportunity Zones

1. Overview — The federal Opportunity Zone (QOZ) program was introduced effective January 1, 2018, as part of the 2017 Tax Cuts and Jobs Act (2017 Act). The QOZ program is a highly flexible tax deferral and permanent savings program available to individuals and business entities that are holding appreciated assets. It offers taxpayers a unique opportunity to divest out of concentrated appreciated asset positions and allow taxpayers to tax efficiently
move the associated Deferred Tax Gain into one or more asset classes.

2. Which Gains are Eligible — The Deferred Tax Gain can be related to a wide variety of capital assets sold by the investor, ranging from: the sale or disposition of land, developed real estate, stock or bond portfolios, artwork, collectibles, Bitcoin or other cryptocurrencies, as well as other tangible and intangible assets. The Deferred Tax Gain must be reinvested into a Qualified Opportunity Zone Fund (QOF) within 180 days of recognizing the tax gain on sale (note there are beneficial timing rules for gains reportable from a partnership). Timely reinvestment will generally allow deferred gain reporting
until the earlier of December 31, 2026, or the date the QOF is sold.

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Written by | Posted in 10 Things To Know About Opportunity Zones

Saavy Taxpayers Transforming Business Gains Into Gold: Turning Net 1231 Gains Into Gross 1231 Gains (and Losses)

Saavy Taxpayers Transforming Business Gains Into Gold: Turning Net 1231 Gains Into Gross 1231 Gains (and Losses)

SAVVY TAXPAYERS ARE TRANSFORMING BUSINESS GAIN TAXATION LEAD INTO GOLD. THEIR APPROACH IS FAR FROM “ORDINARY”.

Key Takeaways

  • Treasury and IRS initially struggled regarding how to deal with IRC Section 1231 gains and losses in the context of the OZ program; however, the final OZ Regulations ended up being extremely taxpayer-friendly.
  • Understanding how and why Treasury arrived at its decision unlocks a remarkable, yet brief, planning opportunity for taxpayers and their advisors.
  • With the right planning, taxpayers can isolate gross 1231 gains for OZ reinvestment eligibility but still claim gross 1231 losses in the same year at ordinary income rates – resulting in permanent tax savings.
  • Taxpayers who already reported net 1231 gains in tax years 2019 and 2020 can still likely make tax-advantaged QOF investments for those years—but the window is closing fast – especially for 2019 1231 gains.
  • This ability to defer 1231 gain and recognize 1231 losses can further benefit certain taxpayers who would have otherwise been forced to pay ordinary rates on net 1231 gains in a given year as a result of the five-year “look-back” period under 1231(c).

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Written by | Posted in IRC Section 1231 • Opportunity Zone

Top 10+ Key Rules On The 180-Day OZ Reinvestment Period

Top 10+ Key Rules On The 180-Day OZ Reinvestment Period

On January 13, 2020 the U.S. Department of Treasury published Final Regulations for the OpportunityZone (OZ) program – a full two years after the powerful and flexible OZ program was implemented as part of the 2017 Tax Cuts and Jobs Act. The Final Regulations were widely applauded following much controversy and public input over the first two rounds of Proposed Regulations that had been released on October 29, 2018 and April 17, 2019.

The several hundred pages of preamble and the text of the Final Regulations certainly have varying levels of complexity, but clearly one of the more challenging areas for OZ investors is determining exactly when the 180-day reinvestment period begins and ends. Taxpayers who get this wrong will completely miss out on the best tax program in decades. A situation you won’t want to be in the middle of.

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Written by | Posted in Opportunity Zone Deadlines

Five Ways Existing Landowners Can Benefit From Deploying Land Into A Qualified Opportunoity Fund (QOF)

Five Ways Existing Landowners Can Benefit From Deploying Land Into A Qualified Opportunoity Fund (QOF)

Anyone in the real estate business is aware of the powerful, impactful and flexible Opportunity Zone (OZ) Program which became effective Jan. 1, 2018 as part of the Trump Administration’s bi-partisan Tax Cuts and Jobs Act (2017 Tax Act). However, developers are generally required to modify their traditional game plan of contributing property, receiving equity as “carried interest” in the partnership and navigating the related-party and self-constructed asset rules in order to comply with some of the unique
structuring requirements under Internal Revenue Code (IRC) Section 1400Z and related Regulations which control the OZ Program.

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Written by | Posted in Qualified Opportunoity Fund (QOF) • Real Estate Investments
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