Opportunity Zone | TaxConnections

05 Mar 2024

A Smart Strategy To Defer Capital Gains: **Harnessing the Power of Opportunity Zones

Are you an investor looking for innovative ways to manage your capital gains? The Opportunity Zone Program might just be the solution you’ve been seeking. Introduced as part of the Tax Cuts and Jobs Act of 2017, this program offers substantial tax incentives for investors who funnel their capital gains into designated Opportunity Zones, stimulating economic growth in underserved communities across the United States.

Here’s how it works: By reinvesting short-term or long-term capital gains from various sources—whether it be from a C-Corp, S-Corp, Partnership, or individual stock market activity —into qualified Opportunity Zone investments, investors can defer and potentially permanently reduce their federal and (most) state tax liabilities. Particularly advantageous is the ability to defer capital gains realized in 2023, including those reported in October, November and December, as well as any capital gains incurred in calendar 2024.

By timely investing capital gains into an Opportunity Zone Fund (including a “captive” OZ Fund that you can fully control), investors can achieve several key objectives:

**1. Capital Gain Deferral:** By reinvesting all or a portion of the capital gain income into a Qualified Opportunity Fund with 180 days of generating the capital gain, Investors can defer paying taxes on their long or short-term capital gains until 2026 or until they sell their Opportunity Zone investment, whichever comes first. This deferral allows investors to retain more of their gains to reinvest and compound over time.

Written by TaxConnections Admin | Posted in Defer Capital Gains • Opportunity Zone

28 Nov 2023

Learn About Opportunity Zones From Nationally Recognized Expert Blake Christian: Questions And Answers

Learn How To Leverage The Opportunity Zone Program

You will receive information from leading tax expert Blake Christian on the Opportunity Zone Program. There are very few people in the country who have this level of expertise on Opportunity Zones. A series of articles and publications will be sent to you that provide substantial information on how the program works. A must have for anyone wanting to gain knowledge and expertise in the world of Opportunity Zones.

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

Look at the beautifully built and affordable homes being placed in Opportunity Zones throughout the country. These homes are beautiful and affordable (priced between 54.5K to 127K).

View MitModular Homes at https://www.mitmodular.com/housing-solutions

Read the FAQs. AMAZING!!

Contact Blake Christian, Tax Partner at HCVT for more information.

Written by Blake Christian | Posted in Opportunity Zone

27 Jul 2023

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 Blake Christian | Posted in Opportunity Zone • Opportunity Zone Benefits • Opportunity Zone Investment

19 Jul 2022

Biden Administration Tax Reform Proposals 2023 Raises Your Taxes To 28% Corporate Rate And 39.6% Individual Rate!

The Department of Treasury has published a 120 Page Report on General Explanations of the Biden Administration’s Fiscal Year 2023 Revenue Proposals. After reviewing this report it is apparent why so many wealthy individuals/families are turning to Opportunity Zones.

The Biden Administration wants to do the following:

Reform Business And International Taxation

Raise The Corporate Income Tax Rate To 28%
Adopt The Undertaxed Profits Rules
Provide Tax Incentives For Locating Jobs In U.S.
Remove Tax Deductions For Jobs Overseas
Prevent Basis Shifting By Related Parties Through Partnerships
Conform Definition Of Control With “Corporate Affiliation Test”
Expand Access To Retroactive Qualified Electing Fund Elections
Expand The Definition Of Foreign Business Entity To Include Taxable Units

Supporting Housing And Urban Development

Make Permanent The New Markets Tax Credit
Allow Selective Basis Boosts For Bond Financed Low Income Housing Credits Projects

Modify Fossil Fuel Taxation

Eliminate Fossil Fuel Tax Preferences
Modify Oil Spill Liability Trust Fund Financing And Super Fund Excise Taxes

Written by TaxConnections Admin | Posted in Biden Administration Tax Proposals 2023 • Opportunity Zone • Tax Increases Proposed

24 Aug 2021

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).

Written by Blake Christian | Posted in IRC Section 1231 • Opportunity Zone

29 Jan 2021

A Bit (Coin) of Luck: Cryptocurrency Tax Gains Find Enhanced Value In The Land Of OZ

Cryptocurrency continues to gain popularity both as an investment asset and as a means to pay for goods and services. The growing ease with which a person can buy, hold and sell cryptocurrency has resulted in an explosion in crypto transactions – and, in turn, has left taxpayers needing to account to the IRS for their newfound cryptocurrency gains (and losses).

This powerful trend reached a new peak in 2020 when, as a result of COVID-19 disruption, related worldwide economic uncertainty and entry of companies such as PayPal into the consumer market (allowing more than 300 million users to easily buy cryptocurrencies), the crypto-market witnessed a dramatic run-up in the values of Bitcoin and many other cryptocurrencies.

Written by Blake Christian | Posted in Bitcoin • Blake Christian • IRC Section 1400Z-2 • Opportunity Zone

23 Sep 2020

IRS: Facts About Opportunity Zones

The Tax Cuts and Jobs Act included changes for businesses and individuals. One of these is the creation of the Opportunity Zones tax incentive, an economic development tool that allows people to invest in distressed areas. This incentive’s purpose is to spur economic development and job creation in distressed communities
by providing tax benefits to investors. Low income communities and certain contiguous communities qualify as Opportunity Zones if a state, the District of Columbia or a U.S. territory nominated them for that designation and the U.S. Treasury certified that nomination. Following the nomination process, 8,764 communities in all 50
states, the District of Columbia and five U.S. territories were certified as Qualified Opportunity Zones (QOZs). Congress later designated each low-income community in Puerto Rico as a QOZ effective Dec. 22, 2017. The list of each QOZ can be found in IRS Notices 2018-48 and 2019-42. Further, a visual map of the census tracts designated as QOZs may be found at Opportunity Zones Resources.

Benefits Of Investing In Opportunity Zones

Written by IRS | Posted in IRS Fact Sheet • Opportunity Zone

03 Jul 2020

TaxConnections Member Blake Christian Named Top 25 National Opportunity Zone Influencers

HCVT tax partner Blake Christian was named as one of the Top 25 National Opportunity Zone (OZ) Influencers Overall and a Top 25 OZ Tax Specialist at the June OZ Expo Tax Conference. The OZ Expo parent OpportunityZone.com conducted its eighth OZ conference in a virtual format as a result of COVID. Blake was one of four CPAs who made both Top 25 lists along with fellow California CPA Michael Novogradac. In response to his honor, Blake states that “the OZ community is very appreciative of Ali Jahangiri and the OpportunityZone.com team for their leadership and the amazing OZ Expo speakers and panels they have provided over the years.” https://www.opportunityzone.com/posts/top-25-oz-influencers-2020/

Blake has specialized in various federal and state tax incentive programs for three decades and has been specializing in the OZ Program since the program’s 2017 adoption as part of the Tax Cuts and Jobs Act (TCJA). To date, HCVT has assisted clients with establishing over 100 Qualified Opportunity Funds (QOF), and Qualified Opportunity Zone Businesses (QOZB) comprised of hundreds of millions of dollars that are invested in real estate projects and operating businesses throughout the country. The OZ program has attracted a minimum of $10 billion of equity dollars through the first quarter of 2020. Still, in counting OZ fund dollars that have been invested into non-public funds such as family offices, the funding is likely closer to $40 – $50 billion based on panelists’ comments at the OZ Expo.

Blake credits this award to a variety of others: “While I am very honored and humbled by this recognition, my involvement in this transformative program is a result of numerous collaborations. My talented and hard-working HCVT OZ Team, my partners, and the many clients who were early adopters, as well as OZ attorneys and consultants who have supported our OZ practice.”
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Written by Kat Jennings | Posted in Opportunity Zone

11 Jun 2020

The Opportunity Zone Program – Ideal For Entrepreneurs

While the first set of Treasury Regulations and initial OZ statute primarily emphasized real estate projects as re-investment options, the final regulations clarified that operating businesses are also appropriate reinvestments for deferred gains.

Unsurprisingly, most of the early Qualified Opportunity Funds (QOFs) focused entirely on real estate projects. However, once regulations had been finalized, investors and advisors have grasped the full flexibility and power of the OZ program. Additionally, private investors, PE firms and VC firms have come to realize that using the OZ program for operating businesses may yield even more substantial long-term benefits than real estate investments — for investors as well as OZ communities.

SINGIFICANT OZ BENEFITS FOR ACTIVE BUSINESSES

Both the Trump Administration and QOF architects view the use of the OZ program as a valuable tax and economic development tool for operating businesses for the following reasons:
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Written by Blake Christian | Posted in Opportunity Zone

11 Jun 2020

Sortis Holdings Launches $50 Million Distressed Real Estate Opportunity Fund

PORTLAND, Oregon, Sortis Holdings, Inc. (SOHI), a Portland, Oregon-based alternative investment fund manager, announces the launch of its sixth investment fund, the Sortis Distressed Opportunity Fund, which will look to capitalize on “once-in-a-cycle” real estate and business opportunities created as a result of the COVID-19 outbreak.

The Sortis team does not estimate a lengthy recession following the pandemic, but they do believe the crisis will have a deep enough impact on certain areas of the real estate market to create special situation opportunities. While the fund will remain asset class agnostic, the management team is eyeing a few particular areas within the real estate market initially.

The Sortis Distressed Opportunity Fund will look to acquire qualified distressed debt, physical real estate, and select operating businesses across the Western United States. This could include, but not limited to: failed projects, discounted performing & non-performing loans, foreclosures, bankruptcies, and other complex situations.

Building upon its existing fund family foundation, the Sortis team will continue its thematic approach into distressed opportunities, while maintaining a keen focus on capital preservation through built-in downside protection and safeguards.
Read More

Written by TaxConnections Admin | Posted in Opportunity Zone

18 Jun 2019

Five Myths About The 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. Note that June 28^th 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

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.

Written by Blake Christian | Posted in Opportunity Zone