Created under the Tax Cuts and Jobs Act (TCJA) of 2017, Opportunity Zones are population census tracts that meet the definition of “low-income communities” under the U.S. tax code and have been designated as an Opportunity Zone.
The TCJA created the Opportunity Zone program to increase investment in economically distressed communities through private funding.
The Opportunity Zone Program seeks to attract investment in economically distressed communities by modifying standard tax treatment of capital gains to either defer or reduce the investor’s capital gain tax liability. Further, future appreciation earned through a Qualified Opportunity Fund may receive tax-free treatment. To qualify for these benefits, investors must reinvest one or more capital gains in a Qualified Opportunity Fund.
A Qualified Opportunity Fund is defined as a U.S. partnership or corporation that invests at least 90% of its holdings in one or more Opportunity Zones. Anyone who recognizes a capital gain for Federal income tax purposes may qualify for the tax benefits that come from investing in Opportunity Zones.
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