The Qualified Opportunity Zone (QOZ) Program encourages economic growth and investment in distressed and low income communities by providing tax benefits to those who reinvest realized capital gains into a Qualified Opportunity Fund (QOF). Specifically, investors have the opportunity to:
- Temporarily defer their gain until December 31, 2026,
- Reduce the amount of gain subject to tax down the road, and
- Permanently exclude post-acquisition appreciation on their original investment.
QOFs play a critical role in allowing investors to receive the tax benefits of the program. However, there is much to consider when launching and maintaining a QOF, including how to:
- Prepare, structure and operate the fund and the underlying Qualified Opportunity Zone Business (QOZB); and
- Manage numerous, complex regulatory deadlines and testing requirements.
As the program and the rules of the QOZ program continue to evolve, the success of any QOF will depend on having the right partner, with the right experience, in place. This page provides some initial information on the program, considerations and ways our team can help.
Learn how we can help investors and those operating a fund navigate and maximize the Qualified Opportunity Zone program
Fund Services
- Fund structuring (single-asset QOF, multi-asset QOF or series LLCs)
- Preparation or review of financial modeling and projections, including multiple of invested capital, cash on cash return and IRR with/without QOZ benefits
- Integration of tax credits and other incentives
- Transaction document review, including private placement memorandum and QOF organizational documents
- Management of regulatory deadlines including: » 180-day investment timeline » 12-month QOF reinvestment period » QOF penalty testing
- Review and planning around fund issues including:
- Analysis of related party issues
- Circular cash flow issues
- Distribution planning including operating distributions and debt financed distributions
- Carried interest planning
- Exit strategies
- QOZB due diligence
- Review term sheets and financial projections
- 70% QOZB property measurement
- 50% gross income requirement/alternative safe harbors
- Nonqualified financial property testing
- Working capital safe harbor review
- Written plan implementation and review
Compliance and Consulting
- Assistance in design and implementation of fund management policies and procedures
- Perform semi-annual agreed-upon procedures for QOF and QOZB
- Perform annual audits, reviews and compilations of QOF and QOZB
- Examine financial accounting control systems
- Federal, state and local tax preparation
- Fund accounting services and investment reporting
