What are Opportunity Zones and How to Create a Qualified Opportunity Fund?

By Steven L. Relis, CPA

November 7, 2018


Opportunity zones were created by Congress to provide incentives for investing in low-income communities thus encouraging economic growth and investment.As of the writing of this summary, the rules regarding the program are in a state of flux as the Treasury Department and the IRS are seeking comment on its proposed guidance that was released on October 19, 2018; therefore, the following is subject to change and clarification:

What are the Tax Benefits?

Opportunity zones provides the following tax benefits:

What is an Opportunity Zone Investment?

  1. Must hold at least 90% of its assets in qualified opportunity one property. Compliance with the 90% asset test is determined by the average of the %age of the qualified opportunity zone property held in the QOF as measured on the last day of the first 6-month period of the taxable year of the QOF and on the last day of the taxable year of the QOF.

What is a Qualified Opportunity Fund (QOF)?

How to create a Qualified Opportunity Fund

Assuming the entity meets the requirements as described above and assuming the investment is located in a qualified opportunity zone, companies can self-certify the entity as a QOF using IRS Form 8996.

About the author - Steven L. Relis, CPA is a co-managing partner with Koutoulas & Relis, LLC, a South Florida based CPA Firm. He has extensive experience working with many clients in various industries including high tech, real estate, construction, manufacturing and professional services. He is a licensed Certified Public Accountant in the States of Florida and New York and is a member of the American, Florida and New York Institutes of Certified Public Accounting.

If you have any questions or comments regarding this article, please email Steve at sr@krcpas.us.