QUALIFIED OPPORTUNITY ZONE (QOZ) PROGRAM

• The Tax Cuts and Jobs Act (TCJA) established the Qualified Opportunity Zones (QOZ) program to encourage investment in economically distressed communities.

• The program offers preferential capital gains treatment for investments made within designated low income census tracts.

• Investors benefit from a temporary deferral of capital gains taxes when those gains are reinvested in a Qualified Opportunity Fund (QOF) within 180 days of realization.

• A 10% step-up in basis is available for capital gains reinvested in a QOF and held for at least five years.

• For investments held for seven years, the basis increases by an additional 5%, allowing investors to exclude up to 15% of the reinvested capital gains from taxable income.

• After 10 years, QOF investors can permanently exclude from taxation any capital gains earned from their investment in the fund.