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Archive for Blake Christian

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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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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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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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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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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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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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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Opportunity Zone Legislative Update (June 2021)

Opportunity Zone Legislative Update (June 2021)

The IRS has been busy releasing updates regarding the Opportunity Zone program (OZ), and the HCVT OZ Team wants to keep you informed on all the latest OZ news.

Most importantly, the Biden Administration is continuing to support the program. This comes as no surprise, considering the architects of the 2018 program came out of the Obama Administration. We do anticipate a few OZ program refinements this year, but no major overhaul. The legislative program updates we anticipate are summarized below, in Exhibit A. For the most part, these changes will be beneficial to investors.

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5 Ways Existing Landowners Can Benefit From Deploying Land Into A Qualified Opportunity Fund

5 Ways Existing Landowners Can Benefit From Deploying Land Into A Qualified Opportunity Fund

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.

The OZ program currently allows up to a current five-year federal (and in all states other than CA, MS, NC, NY and MA) tax deferral on virtually any U.S. short-term or long-term capital gain, other than gains generated on related-party transactions (20% common ownership). For gains invested into a Qualified Opportunity Fund (QOF) by Dec. 31, 2021, the OZ program allows the taxpayer to increase their tax basis in the QOF by 10% after holding the QOF interest for 5 years. Provided the taxpayer has held the QOF for the required five-year holding period on the earlier of: i) Dec. 31, 2026, or ii) the disposition date of the QOF interest the taxpayer only reports 90% of the deferred tax gain. For example, a taxpayer deferring a $1 million gain will report $900,000 on Dec. 31, 2026 (or on an earlier disposition or “Inclusion Event” date).

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Opportunity Zone Legislative Update June 2021

Opportunity Zone Legislative Update June 2021

The Biden Administration is continuing to support the program. This comes as no surprise, considering the architects of the 2018 program came out of the Obama Administration. We do anticipate a few OZ program refinements this year, but no major overhaul. The legislative program updates we anticipate are summarized below, in Exhibit A. For the most part, these changes will be beneficial to investors.

Perhaps the most talked about topic in the tax world is President Biden’s proposal to increase the rates for long-term capital gains. If passed, the maximum rate could rise from 23.8% to 43.4% for taxpayers with over one million dollars of taxable income. There are doubts that Congress will increase the rate to that level, but any rate change may or may not survive until 2026, when the OZ deferred gains are generally reportable (based on the next administration). The risk of the rate increase for 2020 and 2021 deferred gains should be considered when deciding to defer, and we will be glad to discuss the long-term impact.

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Opportunity Zone Legislative Update Effective June 1, 2021

Opportunity Zone Legislative Update Effective June 1, 2021

The IRS has been busy releasing updates regarding the Opportunity Zone program (OZ), and the HCVT OZ Team wants to keep you informed on all the latest OZ news.

Most importantly, the Biden Administration is continuing to support the program. This comes as no surprise, considering the architects of the 2018 program came out of the Obama Administration. We do anticipate a few OZ program refinements this year, but no major overhaul. The legislative program updates we anticipate are summarized below, in Exhibit A. For the most part, these changes will be beneficial to investors.

Read more

Cryptocurrency Investors Turn To Opportunity Zones For Tax Relief

Cryptocurrency Investors Turn To Opportunity Zones For Tax Relief

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.

Read more