Frequently Asked Questions about advanced Qualified Opportunity Zone Funds strategy!
TOP 10 Qualified Opportunity ZOne Fund Answers
Listed are the top 10 answers, call us for the questions if you have not already figured them out.
Things you are going to want to know:
Generally, you have 180 days to invest an eligible gain in a QOF. The first day of the 180-day period is the date the gain would be recognized for federal income tax purposes if you did not elect to defer the recognition of the gain.
The date on which you receive a K-1 notifying you of the eligible gain is not relevant. Partners in a partnership, shareholders of an S corporation, and beneficiaries of estates and non-grantor trusts have the option to start the 180-day investment period on any of the following dates:
- the last day of the partnership taxable year (December 31, 2019);
- the same date that the partnership’s 180-day period begins (July 1, 2019); or
- the due date for the partnership’s tax return, without extensions, for the taxable year in which the partnership realized the eligible gain (March 15, 2020).
For RIC or REIT capital gain dividends, you can choose for the 180-day period with respect to eligible gain to begin either on the last day of your taxable year in which you would otherwise recognize the capital gain dividend (December 31, 2019) or on the date of the dividend distribution, December 10, 2019.
An investor must include the remaining deferred gain on the earlier of an inclusion event or December 31, 2026. The amount of deferred gain included in income depends on (i) the fair market value of your qualifying investment in the QOF on the date of the inclusion event and (ii) adjustments to the tax basis of that qualifying investment.
Subject to an exception for certain partnership merger transactions, the distribution that you received from your QOF partnership is an inclusion event to the extent that the distributed property has a fair market value in excess of your basis in your qualifying investment. However, this inclusion event does not prevent you from excluding from gross income any gains with respect to the remaining qualifying investment if you hold it for at least 10 years and subsequently make an election with respect to that investment.
Yes. The building is QOZ business property, if it meets the following requirements:
- It is intended to be used in a trade or business in a QOZ;
- The materials used to construct the new building were QOZ business property; and
- It is treated as acquired after 2017. For this purpose, the newly constructed building is acquired on the date significant physical work begins.
The contributed land on which the building is located, however, is not QOZ business property because it was not purchased by the QOF.