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Alternative Market Briefing

June 28 deadline looms for investors considering opportunity zones

Thursday, June 27, 2019

Bailey McCann, Opalesque New York:

Investors have a mere 48 hours to defer tax year 2018 gains into opportunity zone investments. Individuals that want to defer taxes from a K-1 flow through entity or 1231 gains by investing in an opportunity zone will need to fund a qualified investment account by June 28. The deadline was included in the most recent opportunity zone guidance issued by the Treasury in April.

The deadline does not mean that investors have to have a specific investment in mind by June 28, there is still time to make those decisions. However, the deferred gains have to be set up in a qualified opportunity zone fund with the intent to be invested through the program. Once the opportunity zone fund is set up, investors have 31 months to source specific investments. A commitment to fund future capital calls does not qualify as a valid opportunity fund investment.

The opportunity zone program gives investors the option to invest through a fund or in individual deals in a qualified area of their choice. Many ultra high net worth investors and family offices are choosing to invest in single opportunities because it is lower overhead than a commingled fund and may dovetail with existing investments or operating companies. In order to participate in one-off deals, investors have to set up a private qualified opportunity zone fund. A handful of law firms and platform providers have stepped in to help investors get set up before the deadline.

Samuel ......................

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