An opportunity zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. See an IRS video Understanding Tax Reform Basics on Opportunity Zones
Localities qualify if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.
- IRS Revenue Procedure: Provides information on the eligibility criteria for census tract designation as a Qualified Opportunity Zone and the nomination and designation process.
- Opportunity Zones Information Resource Map, with sortable lists by State of all census tracts originally eligible for designation as a QOZ. Click here to see Texas areas.
IRS: A QOF is an investment vehicle that files either a partnership or corporate federal income tax return and is organized for the purpose of investing in QOZ property. To become a QOF, an eligible corporation or partnership self-certifies by filing Form 8996 with its timely filed federal income tax return (including extensions). A QOF must hold at least 90% of its assets, measured on two annual testing dates, in qualified opportunity zone property, or pay a monthly penalty for every month it is out of compliance. Further, the eligible entity that elected or is electing to be a QOF must file a completed Form 8996 annually with their timely filed federal tax return (including extensions) to report that the QOF meets the 90% investment standard or to figure the penalty if it fails to meet the investment standard. This is required even in years the corporation or partnership has no taxable income. See Form 8996 instructions. An LLC that chooses to be treated either as a partnership or corporation for federal income tax purposes can organize as a QOF. See IRS Info:
Fundrise map and additional insight on investment incentives stemming on the Opportunity Act.
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