The Tax Cuts and Jobs Act of 2017 included a new Federal income tax incentive for investing in a qualified opportunity fund (a “QO Fund”). For a brief overview of the tax benefits in investing in a QO Fund, see Substantial Tax Benefits in Investing in Qualified Opportunity Funds. A QO Fund is any investment vehicle organized as a corporation or partnership for the purpose of investing in qualified opportunity zone property (“QO Zone Property”) and that holds at least ninety percent (90%) of its assets in QO Zone Property.
In order to qualify for the tax incentive, the QO Zone Property must comply with certain requirements, including, but not limited to those requirements that substantially all of the QO Zone Property (in the event of qualified opportunity zone business property) be used in a qualified opportunity zone (“QO Zone”) or that substantially all of the property owned or leased by the QO Zone Property and at least 50% of the income is from the active conduct of a trade or business (in the event of a qualified opportunity zone business) in a QO Zone.
In southeastern Pennsylvania, there are four (4) QO Zones in Chester County, four (4) QO Zones in Montgomery County, six (6) QO Zones in Delaware County, two (2) QO Zones in Bucks County, and eighty-two (82) QO Zones in Philadelphia County. A map of the QO Zones is found at: https://www.cims.cdfifund.gov/preparation/?config=config_nmtc.xml.
For more information on QO Zones or the tax benefits in investing in a QO Fund, contact Theodore F. Claypoole or another member of the taxation group at Unruh, Turner, Burke & Frees.
