The Tax Cuts and Jobs Act created Qualified Opportunity Zones or QOZs. They are areas designated by the state and certified by the IRS as economically distressed communities. Qualified Opportunity Funds (or QOFs) are the investment vehicles designed to invest in eligible property located in a QOZ.

Investors can defer tax on ANY prior gains that are invested in a QOF. For example, if you sold stock in 2018, and, within the required 180-day period, you invested the amount of the gain in a QOF, you can elect to defer tax on the gain. Note that you must invest the gain amount, but you do not have to invest the entire sales proceeds.     

In addition to the above benefit, Investors in Qualified Opportunity Funds receive additional tax benefits if certain criteria are met.

                             Criteria                                                      Benefit

                        QOF Investment held 5 yrs.                       10% gain exclusion

                        QOF Investment held 7 yrs.                       15% gain exclusion

                        QOF Investment held 10 yrs.                     100% gain exclusion

Three excellent resources for additional information are:

  1. Article in TAXPROTODAY by Mark A. Luscombe
  2. IRS’s Opportunity Zones FAQs
  3. Contact me at david@dmsnydercpa.com.

David M. Snyder, CPA

David Mitchell Snyder, CPA, LLC

727.310.8106