Can an OZF sell assets?

Answers

• 

  Valerie Grunduski

  Plante & Moran, PLLC

  November 16, 2020

  A QOF can sell its assets and reinvest the proceeds but if this happens before an investors 10 year hold, this will result in taxable gain. A QOF could attempt to use Section 1031 to circumvent this issue, but the marriage of 1031 and QOF could make finding replacement property difficult. Lastly, if the QOZB triggers a gain and passes this through to the QOF and ultimately its investors the investor could contribute this same amount of gain into a QOF to defer the gain again (as long as this happens before the 2026 close of program).

• 

  Matthew Rappaport

  Falcon Rappaport & Berkman

  September 23, 2020

  No, that is not true. QOFs can sell assets and have up to a year to reinvest, but normal tax consequences will apply if those sales occur prior to hitting a ten-year holding period.

• 

  Brad Cohen

  Jeffer Mangels Butler & Mitchell

  September 23, 2020

  It can sell. The sale is taxable but reinvested, you don’t destroy the QOF.

• 

  Maria De Los Angeles Rivera

  Kevane Grant Thornton

  October 01, 2020

  That is not true. The regulations allow for the sale of assets and provide a reinvestment period (12 months) in order not to trigger an inclusion event.

DISCLAIMER: 

the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.