The qualified opportunity fund (“QOF”) program created by the Tax Cuts and Jobs Act of 2017 provides significant tax deferral, reduction, and exclusion benefits for taxpayers who timely reinvest realized capital gains in a QOF.  See here for more information on QOFs and their potential benefits.

In order to take advantage of the potential QOF benefits, taxpayers must generally reinvest capital gains realized after December 31, 2017 and on or before December 31, 2026 in a QOF within 180 days of the sale or exchange that triggered the gain.  For many capital gains realized in 2018, 180 or more days have already passed since the gain was realized. Under the proposed regulations that were published in October 2018, however, for owners of a pass-through entity who have an eligible capital gain pass-through to them the 180-day reinvestment window generally begins on the last day of the pass-through entity’s tax year. Accordingly, owners of calendar-year pass-through entities that had eligible 2018 capital gains pass through to them will be able to reinvest these gains into a QOF until June 28, 2019, regardless of when the gains were realized in 2018. This creates a potential second chance for these owners to timely reinvest 2018 capital gains into a QOF.     

Investing in a QOF can provide significant tax benefits for taxpayers with realized capital gains.  Please contact one of the authors or your regular Koley Jessen contact with any questions.

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