By Keiter CPAs
Tax Advantages of Qualified Opportunity Zones for Startups and Existing Businesses
Ryan Beethoven-Wilson, tax senior manager and emerging and growth business team member, shared his insights on the latest Qualified Opportunity Zones (QOZ) regulations with law firm, Dilendorf Khurdayan.
The report, “Qualified Opportunity Zones for Startups & Existing Businesses,” discusses how these regulations may impact startups and growing businesses.
This includes a look at the tax benefits of investing in a QOZ, how to qualify as an Opportunity Zone Business, and how startup and existing businesses may be able to take advantage of a QOZ fund.
“Many startups and existing businesses seeking venture capital don’t realize that they could make an investment in their business more attractive by locating or moving it into a Qualified Opportunity Zone (QOZ).
QOZs, designated by the state in which they are located and certified by the U.S. Treasury through the Internal Revenue Service (IRS), were created as part of the Tax Cuts and Jobs Act of 2017. Investors in QOZs can reduce their recognized capital gains tax and eliminate capital gains tax liability from future appreciation of these QOZ investments.
In December of 2019, IRS finalized the QOZ regulations, which provide favorable treatment for both business and real estate uses. While the final regulations did not substantially alter the spirit of the incentive, they did help clarify rules around certain types of eligible gains, reinvestment timing, and working capital issues. Specifically, QOZs allow investors, within 180 days of a capital gain recognition event, to roll their capital gain dollars into a Qualified Opportunity Fund (QOF), which owns a business located in a QOZ, and defer the taxes on that gain until the earlier of December 31, 2026, or until they dispose of their stake in the fund.”
Keiter’s QOZ team is dedicated to assisting businesses and investors successfully navigate the QOZ requirements in order to take full advantage of this unique tax saving opportunity. Contact us. 804.747.0000
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About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.