Opportunity Zone Investments Outlined for Investors by Tueller & Gibbs, LLP

Tueller & Gibbs, LLP with offices in Denver and Telluride, has significant corporate, tax and real estate law experience. Sean Murphy, Mayor of Telluride and Of Counsel for Tueller & Gibbs, LLP has many years of international tax law experience. “We offer unparalleled service and expertise tor clients considering Opportunity Zone investments,” Murphy said.

Murphy explained that “through the 2017 Tax Cuts and Jobs Act, Congress established the Opportunity Zone program to encourage long-term investments in low-income urban and rural communities nationwide.” In a recent Forbes article by Steven Bertoni, Sean Parker, founder of Economic Innovation Group, touted the following advantage of the Opportunity Zone program: “Instead of having government handout pools of taxpayer dollars, you have savvy investors directing money into projects they think will succeed."

The Opportunity Zone program has the potential to fund a wide variety of projects, including start-up businesses, real estate development, new infrastructure, affordable housing and renewable energy projects. “In contrast to the traditional like-kind exchanges,” Murphy said, “the Opportunity Zone program allows investors to not only defer gain, but also potentially reduce gain. Under the Opportunity Zone program, non-like-kind investments are eligible for the deferral benefit.”

Opportunity Zones are designated by the chief executives of every U.S. state and territory. 
This new economic development program was designed to encourage long-term private investment in low-income communities. “The Opportunity Zones program provides a tax incentive for investors to re-invest their unrealized capital gains into Opportunity Funds,” Murphy added.

Murphy outlined the following important elements of the program for investors:

Incentives: 
Three basic tax incentives (deferral, stepped-up basis and exclusion) can apply when capital gains are invested in low-income census tracts designated as qualified Opportunity Zones. “Low-income census tracts are areas with an individual poverty rate of at least twenty percent and median family income no greater than eighty percent of the area median,” Murphy stated. 
“Colorado has 126 census tracts designated as Opportunity Zones.”

Original Appreciated Property 
An individual or corporate taxpayer has 180 days after disposing appreciated investment property (the “Original Appreciated Property”) to invest the resulting gain in a qualified Opportunity Fund.

Opportunity Funds 
Opportunity Funds are either domestic corporations or domestic partnerships that aggregate (combine) and invest capital in eligible assets within Opportunity Zones. “Eligible assets are Qualified Opportunity Zone Property,” Murphy explained. “They include stock in a domestic corporation that is an Opportunity Zone business; capital or profits interest in a domestic partnership that is an Opportunity Zone business; and tangible property whose original use and substantially all of its use occurs in an Opportunity Zone.”

According to Murphy, existing operating businesses may also qualify as Qualified Opportunity Zone Property. “To qualify,” Murphy explained, “the existing operating business must invest an amount at least equal to the acquisition cost to improve or expand the existing operating business. A minimum of ninety percent of Opportunity Fund assets must be invested in Opportunity Zones.”

Bertoli writes in Forbes, “Treasury and the IRS are scheduled to hand down the final O-zone [Opportunity Zone] rules by the end of 2018. Investments could conceivably start early next year.”

About Tueller & Gibbs, LLP 
Tueller & Gibbs, LLP is structured to represent national companies and small enterprises, as well as individuals dealing with local challenges. Its transactional and litigation attorneys work together as a team providing experiential depth to creatively and pragmatically navigate complex issues. In addition to its Colorado offices in Denver and Telluride, Tueller & Gibbs, LLP has a long-standing relationship with Catherine Conner of Conner Law, PLC in Phoenix, Arizona. For more information, please call (303) 854-9121, or visit http://www.tuellergibbs.com.

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