On December 14, 2018, in anticipation of the IRS hearing for the Qualified Opportunity Zone (the “QOZ”) legislation, our firm hosted the Opportunity Zone Real Estate Fund Workshop at Columbia University’s Faculty House.
We were honored to be joined by panelists from KPMG and JMA Ventures, LLC to discuss opportunity zones and the investor incentives this new legislation brings.
KPMG’s Philip Marra brought to the event over 30 years of experience in the real estate sector. He is also a member of KPMG’s U.S. Asset Management Leadership team and the New York Financial Services Leadership team. As an audit partner based in New York, Mr. Marra was able to break down the proposed tax benefits for investors, as well as discuss the root concept and purpose of an opportunity zone.
Joseph Scalio, KPMG’s Qualified Opportunity Zone Business Lead and U.S. Tax Leader in the Publicly Traded Partnerships delved further into opportunity zones, discussing the requirements, different QOZ structures, as well as state and local benefit enhancements.
Mr. Scalio explained eligible gains, covering short term and long term capital gains, and expanded on who is considered an “eligible taxpayer”. Individuals, C corporations, limited partnerships, and certain other pass-through entities fall under the umbrella of an eligible taxpayer. An entity classified as a corporation or partnership must be created or organized in one of the 50 states, the District of Columbia, or a U.S. territory.
As part of Mr. Scalio’s presentation, he also touched on the 90-percent test that QOZ funds must pass. In general, a QOZ fund is required to use the asset values that are reported on the fund’s applicable financial statement for the taxable year. If the fund does not have this financial statement, it must use the cost basis of its assets.
Jake Werrett, counsel for JMA Ventures, LLC and fund manager for JMA Ventures Opportunity Zone Fund, spoke to our audience from the manager’s perspective, listing the challenges and benefits that a QOZ fund sponsor will encounter. Having gone through the process of fund formation to fund launch, Mr. Werrett was a key asset in helping our audience base really understand a QOZ fund from a core management team’s view.
John Dworkin, an international tax attorney based in New York City, brought to the panel over 20 years of experience. Mr. Dworkin is a current member of the Committee on Taxation of Business Entities of the Association of the Bar of the City of New York and he has served as a panel member and speaker on cross-border tax structuring for various legal education programs. Mr. Dworkin spoke to our audience regarding the tax benefits and regulations for investors, both US-based and internationally.