"An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones 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."
Markets create uncertainty, and today's investing environment is full of it. the stock market is sitting at record highs. Many investors have enjoyed tremendous capital gains from the longest bull market in history. Many business owners should take advantage now on the growth capabilities of these markets.
One of the ways to protect seek long-term prosperity for both business owners and investors is the development and funding provision in an Opportunity Zone Fund (OZF). The legislation passed at the end of 2017 and provides three tax benefits for those who invest a capital gain from the sale of an asset (stocks, real estates, business, etc.) within 180 days:
Capital Gains from the sale of any asset (if reinvested in 180 days) are deferred until the sale of the new investment.
Any capital gains re-invested and held for 5 years gets a tax basis increase of 10%, and any gain held for 7 years gets a tax basis increase of 15%.
PERMANENT CAPITAL GAINS EXCLUSION
Investments held for 10 years will pay no capital gains tax on the post acquisition gains. This permanent exclusion applies only to the gains accrued in the OZF.
Approximately 40% of the 8,700 designated opportunity zones are located in rural areas.
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