Opportunity Zone Structure in Newport News
This informative content outlines the structure of Opportunity Zones in Newport News, featuring key speakers and important details regarding deferral of gains, investments, ownership structures, and fund management. Learn about the processes involved in qualifying for and utilizing Opportunity Zones for tax benefits and economic development.
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Presentation Transcript
Opportunity Zone Structure Newport News SPEAKERS Greg Davis, CPA gdavis@cbh.com
Meet the Speaker Greg Davis, CPA Partner, Tax Services
U.S. Opportunity Zone Areas CDFI - https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx 3
Time to Elect Deferral of Gain 180 DAYS FROM SALEEVENT TO ELECT TO DEFER GAIN & FUNDQO-FUND PURCHASE100% OF ASSETS,BUYER XYZ,Inc. (S-Corp) 100%STOCK OWNERSHIP Qualified Opportunity ZoneFund (QO-Fund) 180 DAYS FROM END OF CORPORATION OR PARTNERSHIP TAXABLE YEAR(12/31) Buyer TO DEFER GAIN & FUNDQO-FUND (TAXPAYER MAY ELECT OUT AND FUND EARLY IFDESIRED) Seller,Taxpayer
QOZ Sample Ownership Structure 70%OWNERSHIP QOZBusiness OutsideInvestor QOZFund
Investments in Qualified Opportunity Zone Business Property QOF (Corporation or Partnership) Investment Into Partnership Interest Investment IntoStock Invest Directly QOZB QOZB (Stock) (Partnership) Qualified Opportunity Zone Business Property
Funding QOZ and ProjectCo CANNOT INVESTIN ANOTHER QO FUND QO Fund Will Have 180 Days From When Capital Came IntoFund (1065Partnership) 10,000,000 9,000,000 1,000,000 GAIN DEFERRED Q O PROPERTY CASH SECURITIES, OTHERINVESTMENTS CANNOT INVEST IN ANOTHERQO FUND Defer 10,000,000 Gain 7/1/19 CANNOT BUY STOCK/LLC INTEREST IN ANOTHERCOMPANY MUST DEPLOY CAPITAL WITHIN31 MONTHS OFFUNDING FUNDPROJECT ENTITY WITH 9,000,000 MUSTHAVEWRITTENPLAN FOR WORKINGCAPITAL ProjectEntity (1065Partnership) 70% OF TANGIBLEPROPERTY MUST BEQOZB PROPERTY Buyer INVESTED 9,000,000 6,300,000 2,700,000 Q O PROPERTY CASH SECURITIES, OTHERINVESTMENTS
Comparison of Direct Investment vs. Indirect Investment Requirement Direct Investment Indirect Investment Percentage of Opportunity Fund s assets that must be invested in qualified opportunity zone business property 90% N/A Percentage of Opportunity Fund s assets that must be invested in stock or partnership interests N/A 90% 5% plus reasonable working capital Percentage of Opportunity Fund s assets that may be held in cash or other liquid investments 10% Unlimited, but intangible property must be used in trade or business No minimum Percentage of Opportunity Fund s assets that may be held in intangible property 10% Percentage of Opportunity Fund s assets that must be invested in tangible property 90% Percentage of gross income that must be derived from Opportunity Zone None 50% Ineligible Businesses None Sin Businesses 8
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What Questions Do You Have? Greg Davis, CPA Partner, Tax Services 757.228.7030 gdavis@cbh.com
