Resolute’s Qualified Opportunity Fund (QOF)

As part of the Tax Cuts and Jobs act, on December 22, 2017, Congress adopted legislation that included the introduction of Qualified Opportunity Zones (QOZ).

Resolute’s Qualified Opportunity Fund (QOF) allows investors to invest in Qualified Opportunity Zones.

Please note: This fund is in pre-launch. We will notify you when we open the fund to investors, circa January 2019.


Tax Deferral Qualification

To qualify for tax deferral, an Investor’s capital gains must be invested into a QOF within 180 days of the sale or exchange that generated the capital gain.

4 Important Milestones to Consider

To incentivize long-term investment in the Qualified Opportunity Fund the following tax treatments apply:

1 Year - 0 reduction in capital gains tax

5 Years - 10% reduction in capital gains tax

7 Year - a further 5% reduction (Total of 15%) reduction in capital gains tax

10+ Year = The investment in a QOF is eligible for an increase in basis equal to the Full Market Value (FMV) of the investment on the date that the investment is sold or exchanged (i.e. a full set up in basis)

Investors can defer tax on capital gains tax until the earlier of (a) The date the Investment is sold or (b) December 31, 2026.

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Key Opportunity Fund Timeline

 
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How it works - Sample Scenario*

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Treatment of Capital Gain invested in the Resolute Qualified Opportunity Fund (QOF)

Equity Investment in QOF: $10m

  • New Asset Price: $30M

  • Debt on New Asset : $20M

  • Basis at Year 1: $0 (not including debt)

  • Basis at Year 5: $1M

  • Basis at Year 7: $1.5M

  • Recognize deferred Capital Gains on December 31, 2026

    • (Capital gains rate 20%) x ($8.5M) = $1.7M

    • Tax savings on recognition date: $2M - $1.7M = $300K

  • Sale at Year 10: $40M

    • Capital gains: $10M

    • Capital gains tax due at sale: $0

    • Tax savings at sale: (Capital gains rate 20%) x $10M = $2M

    • Tax savings from depreciation recapture = $1.5M

  • Total Tax Savings at Year 10: $300K + $1.5M + $2M = $3.8M

*Disclaimer: Tax Treatment is simplified for illustrative purposes and should not be relied upon for accounting tax or legal advice.

Where are the Opportunity Zones?

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There are 8,687 opportunity zones across the US. To view an interactive map of Opportunity zones - Click Here . Interactive Map from EnterpriseCommunity.org under their creative commons license.

Some additional resources for you

To help educate our partners we have collated some useful video content from across the web**.

Mark Ein, founder and CEO of Capitol Investment, discusses a proposed program by Republicans that allows investors to defer taxes on capital gains if they invest in lower income areas.

Kevin Hassett, Council of Economic Advisers chairman, on how the Treasury Department released proposed rules for the "opportunity zone" program created by President Trump's tax law.
South Carolina Republican Sen. Tim Scott discusses how the "opportunity zone" program that he included in the Republican-backed tax reform bill is helping "distressed" communities.

Uploaded by Senator Tim Scott on 2018-09-20.

**Copyright and content ownership resides with the respective creators and is shared on this site in line with the YouTube Terms of service.