The Tax Cuts and Jobs Act created a new tax-planning strategy called “Qualified Opportunity Funds.”
It was designed to provide a new qualified-opportunity-fund tax-deferral strategy that can also eliminate some capital gains and make others tax-free.
Our take on qualified opportunity funds?
We believe they do provide an ability to defer (and possibly eliminate) some capital gains but they aren’t the panacea some make them out to be.
To find out the good, the bad, and the ugly facts about qualified opportunity funds, read my new article titled Tax Tips: Tax Reform’s New Qualified Opportunity Funds: Helpful or Hype?
Three ways our fact-filled article can help you:
- We’ll explain exactly what a qualified opportunity fund is. A qualified opportunity fund makes an investment in a designated low-income community … a qualified opportunity zone. Governors designate what census tracts in their state qualify. You’ll get all the details when you read the full article.
- We’ll explain who is eligible to participate. Individuals, C corporations, S corporations, partnerships, and trusts and estates are eligible to invest in the opportunity entity in order to gain deferral under the provision. All will be explained when you read the full article.
- We’ll tell you how the program works. To qualify, your gain must meet three requirements:
- The gain must be a capital gain, either short-term or long-term.
- You’d have to recognize the gain for federal income-tax purposes before January 1, 2027 without this provision.
- The gain isn’t from a sale or exchange with a related person.
We’ll explain this all in easy-to-understand language when you read the full article.