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Archive for Blake Christian

Is It Better To Start A New Business Or Relocate An Existing One Into An OZ?

start a new business or relocate an existing one into an OZ

As we enter into the third year of the federal Qualified Opportunity Zone (QOZ) program we have a slightly clearer picture of how taxpayers are using this flexible and impactful program.

Not surprisingly, the vast majority of early Qualified Opportunity Funds (QOFs) formed through Dec. 31, 2019 are focused on real estate projects as they begin directing their investments into Qualified Opportunity Zone Businesses (QOZBs). Preliminary reports in 2019 indicated that only about 5% of public QOFs were focused on operating businesses. However as the Treasury Department provided more guidance through new sets of proposed and final regulations, taxpayers and the OZ community have come to realize that using the OZ program for operating businesses can yield even greater long-term benefits for both OZ communities and investors compared to real estate projects alone.

OZ PROGRAM PARTICIPATION

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Opportunity Zone (OZ) Final Regulations & Frequently Asked Questions

BLAKE CHRISTIAN _opportunity zone frequently asked questions

The federal Opportunity Zone (OZ) Program was enacted as part of the 2017 Tax Act. Two sets of lengthy Proposed Regulations were issued in 2018 and early 2019. On December 18th Treasury and the IRS issued 544 pages of Final Regulations, including an extensive preamble.

Consistent with the Proposed Regulations, Treasury attempted to interpret the OZ statute in the most taxpayer friendly
ways. The Final Regulations (“Regulations”) are being well-received by OZ investors, OZ Fund managers and OZ consultants. We anticipate that OZ fund investing will see renewed momentum as a result of the clarity in these regulations, as well as the December 31st deadline for maximizing the OZ benefits.

The Regulations will generally become effective 60 days from December 18th, but taxpayers can elect to adopt
them earlier.

A discussion of the most significant provisions are summarized below:

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December 31st Deadline To Maximize Federal Opportunity Zone Benefits

BLAKE CHRISTIAN -Maximize Opportunity Zones Benefits

The federal Qualified Opportunity Zone (QOZ) program is by the far the most valuable and impactful tax program enacted in this century.  The program was developed under the Obama Administration but finalized under the Trump Administration and had wide bi-partisan support since it is designed to infuse hundreds of billions of dollars into economically challenged communities. The program will yield significant tax benefits for both investors and communities across the country for the next three decades.

December 31st is a very critical date for investors and QOZ fund managers:

  • Qualified Opportunity Funds (QOF) must be established and funded by December 31, 2019 in order for those investors to get the maximum benefits under this long-term investment program. This deadline exists since the OZ rules require an investor to hold their fund investment for at least seven years to obtain the maximum 15% reduction in the deferred tax gain that must be reported on December 31, 2026. Investments made after December 31st will not allow the full seven-year holding period – resulting in an additional 5% gain in 2026.

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Options For Qualifying Your Pre-2018 Opportunity Zone Property

BLAKE CHRISTIAN - Qualifying For Opportunity Zone Program

Anyone in the real estate business should be aware of the new, powerful, and flexible Opportunity Zone (OZ) program, which became effective January 1, 2018, as part of the Trump Administration’s Tax Cuts and Jobs Act (2017 Tax Act).

The OZ program allows up to a seven-year federal (and in most states) tax deferral on short-term or long-term capital gains, resulting in a 15 percent permanent tax reduction on the reinvested gains after holding the OZ investment for at least seven years, and a complete federal tax exemption of any post-reinvestment appreciation in the OZ investment(s) after ten years. It is important to note that California, Massachusetts, Mississippi, and North Carolina have not adopted the federal provisions. OZ- related tax benefits are not available in these states; therefore, real estate transactions may be best suited for Section 1031/ Like-Kind Exchanges rather than OZ investments.

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Five Myths About The Opportunity Zone Program

Blake Christian Opportunity Zone Program

Due to the newness and uniqueness of the Opportunity Zone (OZ) Program and the voluminous OZ regulations, there is a fair amount of inaccurate information floating around in the business community.  Following is a non-exhaustive list of some of the more common misconceptions about this powerful federal tax program.  More details on the program can be found at https://www.hcvt.com/services-Federal-Qualified-Opportunity-Zone.html.

1) Only taxpayers with long-term capital gains can participate in the OZ Program.

False: Short-term capital gains and net §1231 (trade or business asset) gains, §1250 building depreciation recapture, capital gain dividend distributions, and a portion of certain “straddle” transactions can also qualify for Opportunity Zone (OZ) reinvestment. Unlike Internal Revenue Code (IRC) §1031 transactions, the OZ program can be used for real estate, tangible personal assets, bitcoin, art, collector cars, business sales, intangibles, and stocks.

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Is Your Business Still the Right Entity Under the New Tax Rule? Part 2

Blake Christian 2

More tips about determining the right corporate, partnership or other structure that’s best for your business—and where you are in life. Key Takeaways:

  • The legal structure of your business operations can have a significant impact on your annual income tax and estate planning.
  • When you and/or your heirs expect to be at or near the maximum income tax rates, you will generally want to leave appreciated and appreciating assets in the taxable estate, rather than transfer them prior to death.
  • In general, assets with the potential to appreciate in value should not be placed into an S or C Corporation.

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Is Your Business Still the Right Entity Under the New Tax Rule? Part 1

Blake Christian

What you need to know about corporations, partnerships and other structures under which you do business

Key Takeaways:

  • There are six widely used business operating structures. Each has pros and cons depending on the owner’s income and estate planning options.
  • Choosing the right legal form for your business is critical for both legal and tax purposes
  • The Tax Cuts and Jobs Act of 2017 (2017 Tax Act) made significant changes that should be factored into your entity choice.

As many of you know, The 2017 Tax Act made significant changes to the tax code. Most significantly individual tax rates have dropped and now cap out at 37 percent (vs. prior 39.6 percent). Here are some of the other highlights:

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Request These Informative Articles From A Leading Tax Expert On The Federal Opportunity Zone Program

CIRCLE IRS OPPORTUNITY ZONES

TaxConnections is fortunate to have tax expert Blake Christian as a member of our platform. Given my expertise searching for tax experts for corporations worldwide, I can assure you Blake Christian is a leading tax expert on the new Opportunity Zone Program. He advises multinational corporations and he is sought out frequently by tax firms all over the country who consult with him.

Take this opportunity to receive a copy of all of his educational articles on the topic of the Federal Opportunity Zone Program. Whether you are a tax executive with a multinational corporation, a Tax Partner with a firm, or a CFO, you will learn how to utilize these extraordinary tax incentives to save your organization significant tax dollars.

Register Here To Receive Valuable Information On

The Federal Opportunity Zone Program

  1. Which Gains Are Eligible?
  2. Qualified Opportunity Fund Requirement
  3. Tax Basis Adjustments/Gain Reporting Exemptions
  4. Legal Form Of Qualified Zone Fund
  5. Percentage of Qualified Property Test/Penalty
  6. Ineligible Business Types
  7. State Tax Complexities
  8. Real Estate “Original Use” Rehab Requirements
  9. Who Should And Should Not Invest In A QOF?
  10. Hiring Tax Credits – 8500 Tax Incentive Zones
  11. 5 Myths About The Opportunity Zone Program
  12. 5 Ways To Leverage The Opportunity Zone Program
  13. Opportunity Zone Participation Window
  14. Open Issues On Opportunity Zones
  15. Investment Diversification And Tax Savings

 

Opportunity Zone Participation Window Expires June 28, 2019 For Those Who Want To Participate For 2018 Capital Gains

Blake Christian On Opportunity Zones

Taxpayers wishing to participate for any calendar 2018 capital gains must act quickly.

The Opportunity Zone (OZ) Program, ushered in as part of the 2017 Federal Tax Cut & Jobs Act, includes one of the most powerful and flexible tax planning provisions in decades.  The Program allows taxpayers who are generating capital gains from real estate sales, stock sales, artwork, Bitcoin, vehicles, intangibles and most other assets to roll over all or a portion of the gain into a Qualified Opportunity Fund (QOF) and achieve the following benefits:

  • Defer reporting the initial tax gain until December 2026.
  • Earn a 10% tax basis increase in their QOF investment in Year Five and another 5% increase in Year Seven – resulting in a permanent tax reduction.
  • Most importantly, gains accruing after the investment into the QOF will be 100% tax-free upon sale if the investment is held for at least 10 years.

The challenge for many is to roll those gains within 180 days from when the tax gain is reportable. As a result, action must be taken no later than June 28th, 2019 to participate in the OZ Program for any eligible calendar 2018 tax gains.

 Two important ways to participate while window of Opportunity is still open

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5 Ways To Leverage The Opportunity Zone Program – What You Will Be Happy To Learn About The OZ Program

Blake Christian On OZ Program

The Opportunity Zone (OZ) Program has been around for almost 18 months now but as a result of complexities and open issues on exactly how taxpayers would participate and benefit, the program is now getting national traction and investment dollars. The OZ Program is the most powerful investment and diversification and economic development tool I have seen in four decades of tax consulting.

The OZ Program borrows elements from other long-standing tax provisions –

-Internal Revenue Code Section(IRC) 1031(Like Kind Exchange) which allows taxpayers to defer taxes on properly structured real estate swaps,

-Roth 401K’s/IRAs which allow taxpayers to build-up tax-exempt income after holding the Roth Account for at least five years, and

-The Federal New Market Tax Credit Program

In summary, the OZ Program allows taxpayers to rol over all or a portion of capital gains (long or short-term) income into a Qualified Opportunity Fund (QOF). The invested funds can then be deployed into real estate or an active business located in one of the 8,700 qualifying census tracts throughout the U.S. and U.S. territories. Following these steps allows the taxpayer to defer the tax on their original capital gain until December 2026. Depending on when the taxpayer rolls their gain, they may also be eligible for a reduction in their reportable gain of 10% to 15%.

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Five Myths About The Opportunity Zone Program

Blake Christian Opportunity Zones

Due to the newness and uniqueness of the Opportunity Zone (OZ) Program and the voluminous OZ regulations, there is a fair amount of inaccurate information floating around in the business community.  Following is a non-exhaustive list of some of the more common misconceptions about this powerful federal tax program.  Note that June 28th is the deadline for setting up a Qualified Opportunity Fund (QOF) and investing cash or property from most calendar 2018 capital gains.  More details on the program can be found at:

https://www.hcvt.com/services-Federal-Qualified-Opportunity-Zone.html

  1. Only taxpayers with long-term capital gains can participate in the OZ Program.
  • False: Short-term capital gains and net §1231 (trade or business asset) gains, § 1250 building depreciation recapture, capital gain dividend distributions, and a portion of certain “straddle” transactions can also qualify for Opportunity Zone (OZ) reinvestment. Unlike Internal Revenue Code (IRC) §1031 transactions, the OZ program can be used for real estate, tangible personal assets, bitcoin, art, collector cars, business sales, intangibles and stocks.

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Over 8500 Tax Incentive Zones Throughout The U.S. Allow Employers To Claim Percentage Of Credits For Wages

Blake Christian - Tax Credits And Incentives
Hiring Tax Credits

An abundance of Federal and California hiring tax credits can offset your tax liability on a dollar-for-dollar basis.

Is your business potentially missing out on significant tax refunds which can offer you enhanced cash flow and a competitive advantage? Numerous federal and state tax hiring tax credits and incentives can offset your tax liability on a dollar-for-dollar basis. Any missed credits for past years can be secured via amended returns for at least the past three years, and to the extent the credits cannot be used in the prior or current year, liberal carryover rules generally apply. Federal and California hiring tax credits are abundant and should never be overlooked by those who have the potential to take advantage of them.

The significance of hiring tax credits is especially true for businesses when hiring employees. There are over 8,500 tax incentive zones throughout the country which generally allow employers to claim credits for a percentage of wages paid to employees meeting certain criteria at the time of hire. Which hiring tax credit and other incentive programs you qualify for.

Hiring Tax Credits Available to You

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