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What is an Opportunity Zone?

What does this investment do?  Well for starters, you get to defer the capital gains tax on realized capital gains until 2026.  If you hold an investment for 5 years, there will be a 10% step-up in basis.  If you hold it for 7 years, there will be an additional 5% step-up in basis.  Therefore, you get a deferral as well as a 15% reduction in taxes paid.  Not bad.
 
However, the huge potential benefit, results from the investment in the Opportunity Zone Fund.  If you hold this investment for at least 10 years and it is sold at a gain, then you will pay no income tax.  That’s right—no income tax.
 
Please think if you have any realized capital gains and whether such gains are reported on a K-1 from a flow-thru entity.  This means all capital gains—stocks, bonds, sale of businesses, sale of medical practices—you name it.  All capital assets qualify. 
 
Please do not hesitate to contact me with any questions.


Don Deans, CPA/PFS