An Important Deadline for Opportunity Zone Investing is Fast Approaching
Since their introduction in the Tax Cuts and Jobs Act of 2017, qualified opportunity zones have attracted attention as a important tax planning tool. And despite the recent headlines focusing on rising inflation, rising interest rates, and (possibly) rising tax rates, investments in qualified opportunity zones may still be a haven for taxpayers seeking to mitigate income tax liabilities.
Due to a special rule contained within the body of the regulations, certain taxpayers who reported an eligible gain from a 2021 Schedule K-1 have until September 10, 2022 to invest in a qualified opportunity fund.
As a reminder, the incentives of the opportunity zone program include:
- Deferred recognition of an otherwise recognized capital gain until December 31, 2026 or earlier if the qualified opportunity fund investment is sold before this date.
- Permanent exclusion of gain recognized on the disposition of the qualified opportunity fund investment or its underlying assets. The exclusion is only available if the investment is held for 10 years.
CLA has become a leader in the opportunity zone compliance and consultation space over the years, working with numerous stakeholders of the opportunity zone program, including individual investors, fund managers and sponsors, developers and operators, and small business owners. CLA’s national team of subject matter professionals such as Brian Duren and Ben Darwin and Managing Principals of Wealth Advisory like Jack Rybicki and Chris Dhanraj can help you understand when a qualified opportunity fund investment can be considered, the tax benefits of investing in qualified opportunity funds, the critical items to consider when making a qualified opportunity fund investment decision and potential alternative strategies to defer federal capital gains tax liability.
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
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