One of the Tax Cuts and Jobs Act best kept secrets is it’s new Federal Opportunity Zones Program.
Piggybacking on the U.S. Department of Treasury’s Markets Tax Credit Benefits Program, the zones program will designate opportunity zones within each state and will provide a tax incentive for investors to re-invest their unrealized capital gains into opportunity funds. Other benefits include a temporary gain deferral and a permanent exclusion on taxable income of 100 percent of the capital gains of the sale or exchange of an investment in the opportunity zones.
In order to qualify as an opportunity zone, low-income communities’ census tracts must meet certain demographic data like an area’s high individual poverty rate. Each state’s governor will only choose 25 percent of the qualified opportunity zones in their state.
“In Indiana almost every city’s core downtown qualifies. All of northern Lake County with the steel mills qualify for opportunity zones,” said Frank Hoffman, NFIB member and partner at Ice Miller’s Business Group based out of Indianapolis, Indiana. “Indiana’s process hasn’t come out yet. There are only 155 of the 620 that will be chosen in Indiana.”
Since the program started in late December, small business owners based out of potential opportunity zones have had until March 21–some states are asking for an April extended deadline–to contact local government to encourage that their areas are chosen.
“I encourage NFIB members to learn about it from their governor’s office. You can contact your mayor or local government because they will help advise the governor as to which census tract should qualify,” Hoffman said. “This is literally in the top five of the economic benefits derived from tax reform.”
