The (TCJA) has provided additional tax benefits from investing in “Qualified Opportunity Funds.” These funds create a new tax incentive program designed to promote new investment capital into certain low-income and distressed communities throughout the country. They are referred to as Qualified Opportunity Zones. The program enables investors with unrealized capital gains to receive significant tax incentives for investing in these funds.
A Qualified Opportunity Fund is a privately managed investment vehicle, generally formed as a partnership, LLC or a corporation, whose sole purpose of formation is to invest at least 90% of its assets directly invested into a qualified Opportunity Zone property.
Qualified Opportunity Zones are designated census tracts or neighborhoods. For a census tract to be treated as a Qualified Opportunity Zone, the governor of the respective state must identify such communities in writing to the U.S. Treasury Department. The Treasury Department must then certify each designated area as a Qualified Opportunity Zone. Each zone will maintain its designation for 10 years.
Under the TCJA there are three specific tax incentives possible for investing in a Qualified Opportunity Zone fund:
When the investment in the Qualified Opportunity Fund is held for 10 years, the taxpayer will not recognize taxable gain on the appreciation in value of the investment in the Qualified Opportunity Fund.
Check with your CPA to find out how investing in these Qualified Opportunity Funds will impact your investments.
Cornell Law Article https://www.law.cornell.edu/uscode/text/26/1400Z–2