Opportunity Zone | TaxConnections

22 Aug 2023

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

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 Blake Christian | Posted in Opportunity Zone Update • Safe Harbor Business Plan

17 Aug 2023

Updating Your Opportunity Zone Working Capital Safe Harbor Business Plan

What is Working Capital Safe Harbor Plan?

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 Blake Christian | Posted in Opportunity Zone Update • Safe Harbor Business Plan

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

21 Jan 2020

Is It Better To 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

Written by Blake Christian | Posted in Opportunity Zone Final Regulations • Relocate New Business • Start New Business

25 Jun 2019

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

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 28^th, 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

Written by Blake Christian | Posted in Opportunity Zone Tax Incentive

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