Serving clients on every continent, routinely named one of the top five law firms in the U.S. for its hedge fund practice, and frequently honored for outstanding results, Sadis is known nationally and internationally as a dominant force in the financial services sector.
The 2017 tax reform legislation, the Tax Cuts and Jobs Act (“TCJA”), has created a significant new income tax incentive for taxpayers to make investments in designated low-income areas, known as Qualified Opportunity Zones (“QOZ”). The new tax provisions (Internal Revenue Code Sections 1400Z-1 and 1400Z-2) provide for a deferral of capital gains realized on sales of “any property” to an unrelated party where an amount equal to such gain is reinvested in a Qualified Opportunity Fund (“QO Fund”) within 180 days, as well as other substantial tax preferences, as discussed below. In addition, certain amounts of the capital gains tax attributable to the reinvested money may be permanently exempted from tax if the investment in the QO Fund is held for longer than 5 or 7 years (10% and 15%, respectively), and if the investment in the QO Fund is held for at least 10 years, any gain from post-investment appreciation in the QO Fund is permanently excluded from tax.
With decades of experience in structuring private fund vehicles and experts in fund structuring, real estate and international taxation, the opportunity zone team at Sadis stands ready to guide you through any concerns relating to structuring a fund, executing a QOZ investment strategy, and handling any tax and commercial considerations.
For more information regarding opportunity funds, reach out to one of our practice contacts.
Download Our Opportunity Zone Q&A Here
A Qualified Opportunity Zone Fund (QO Fund) is an investment vehicle created under the 2017 Tax Cuts and Jobs Act that allows taxpayers to defer capital gains by reinvesting an amount equal to those gains within 180 days of the sale. Investors may also reduce the deferred gain through basis increases tied to holding periods and exclude appreciation on the QO Fund investment from tax if held for at least 10 years.
Sadis's opportunity zone team, drawing on decades of experience in private fund structuring, real estate, and international taxation, guides clients through fund structuring, executing a QOZ investment strategy, and handling tax and commercial considerations. The firm advises both Qualified Opportunity Zone Funds (QO Funds) and Qualified Opportunity Zone Businesses (QOZBs).
Under the relevant provisions of the Internal Revenue Code (Sections 1400Z-1 and 1400Z-2), capital gains realized on the sale of 'any property' to an unrelated party are eligible for deferral when reinvested into a Qualified Opportunity Fund within 180 days of the sale. Sadis advises clients on the specific eligibility requirements and timing rules applicable to their transactions.
Yes. Sadis advises Qualified Opportunity Zone Fund managers on ongoing compliance with QOZ requirements, including the 90% asset test, substantial improvement and original use requirements for Qualified Opportunity Zone Business Property, and annual self-certification obligations.
Yes. Sadis has published an Opportunity Zone Q&A document that outlines key aspects of QOZ investing. Prospective investors and fund managers can contact Sadis's practice contacts directly for more information or to discuss a specific opportunity zone investment strategy.
