Qualified Opportunity Funds
Qualified Opportunity Funds are a vehicle through which investors can take advantage of the Qualified Opportunity Zone program outlined in the Tax Cuts and Jobs Act of 2017. By providing tax benefits to potential investors through the application of unrealized gains, the program aims to spur investment in low-income community population census tracts.
Investments made through Qualified Opportunity Funds provide significant tax benefits, including a temporary deferral of tax on gains, the elimination of up to 15% of the tax on the deferred gain, and the potential exclusion from tax on gain generated from the appreciation of investments within the Qualified Opportunity Fund.
To qualify as a Qualified Opportunity Fund, an investment vehicle must be organized as a corporation or partnership for the purpose of investing in Qualified Opportunity Zone property (versus another Qualified Opportunity Fund). In addition, 90% of its assets must be Qualified Opportunity Zone property. Asset status is determined by the average of the percentage of Qualified Opportunity Zone property held in the fund, which is measured on the last day of the first six-month period of the fund’s taxable year and on the last day of that taxable year.
EisnerAmper has a team of fund specialists dedicated to assisting Qualified Opportunity Fund investors with a wide array of services. Tax compliance and planning are critical elements in a fund’s financial strategy. Beyond preparing returns, we work closely with clients on business and tax structuring designed to minimize federal, state and local income tax; withholdings; UBTI; ECI; FIRPTA and other taxes. Another facet of our tax planning focuses on maximizing capital gain treatment and the implementation of REIT structures for funds in order to offer investors tax-efficient returns. We also review quarterly compliance testing, assist with federal and state examinations, and analyze sales tax on shared services agreements and purchases.
Our advisors can also offer clients assistance with consulting on structuring and qualifying funds, due diligence on acquisitions and dispositions, due diligence on a Qualified Opportunity Fund’s assets, audit and tax compliance including qualification testing, and outsourced fund administration services.
With EisnerAmper’s deep bench of professionals and access to robust fund resources, we can provide comprehensive support for Qualified Opportunity Funds. For more information on Qualified Opportunity Funds, check out these EisnerAmper resources:
- Interactive Overview: Qualified Opportunity Zones: Tax Incentives for Investors
- Technical Article: Opportunity Zones and Opportunity Funds: A Major Tax Cuts and Jobs Act Investment Initiative
- Webinar: Qualified Opportunity Zones: Real Estate Investment Incentives in the TCJA
- Bloomberg Article: Tax Act’s Overlooked Provision