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How Investors Can Receive Tax Benefits While Retaining Control Over Their Opportunity Zone Projects

Bloomberg Tax

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  • July 09, 2019

Scott Manning and Tyler Smith wrote an article in Bloomberg Tax on how businesses and individuals can maximize benefits under the federal Opportunity Zone program. 

"Public interest in opportunity zones has been red hot, particularly in 2019, as the federal government has released long awaited guidance that should help the program truly take off," they wrote. "This interest in opportunity zones has not been limited to traditional investment funds and their potential investors. In fact, many individuals and businesses are seeking to benefit from the new law by investing in qualified opportunity zones while retaining control over their investments and a greater voice in the one or more underlying projects."

"An individual or business may achieve opportunity zone benefits and still retain control over such projects by investing in a closely held 'qualified opportunity fund' (QOF), as long as the various statutory and regulatory requirements are satisfied," they continued. "On the other hand, individuals and businesses are likely to find the complex array of tests and thresholds imposed by the opportunity zone statutes and regulations difficult to navigate. Compliance with these rules is even more challenging when taking into consideration the complexities of corporate and partnership tax laws."

Scott and Tyler then highlighted some of the issues that may be encountered in the formation of a closely held QOF by walking through a hypothetical example. 

Subscribers can read the full article hereBloomberg Tax is one of the world's leading sources for tax news and analysis.