Tax Issues for Foreign Investors in Qualified Opportunity Zones: Deal Structures, Tax Rules, Planning Strategies

The 2017 tax reform created QOZs to encourage investment in specific geographic areas. Taxpayers investing in qualified opportunity funds (QOFs) can defer and even exclude the capital gain if they meet certain requirements.

To take advantage of the tax benefits of the QOZ program, a taxpayer must reinvest capital gain proceeds in a QOF within 180 days from the date of the sale or exchange of a capital asset. A QOF must hold at least 90 percent of the fund's assets in QOZ property. Tax counsel and advisers must understand and develop planning techniques to assist individuals or businesses seeking to invest capital, raise funds, or recognize significant capital gains in the next few years.

For foreign investors, the requirements and rules for investments in QOFs are particularly complex. On Apr. 12, 2021, the IRS proposed regulations on QOZs, providing new requirements and withholding relief for foreign investors in QOFs. The new regulations include requirements for eligible foreign persons and foreign-owned partnerships to acquire the federal income tax benefits under Section 1400Z-2 and reduce or eliminate withholding tax under Section 1445, 1446(a), or 1446(f) on certain transfers.

Listen as our panel discusses the necessary legal requirements and processes to achieve the tax benefits of QOZs, techniques to ensure deferral or reduction of capital gains for foreign investors, and recommended guidance for counsel and advisers.

1. Opportunity zone provisions under current tax law and recent IRS regulations
2. Processes and criteria designating QOZs
3. Key issues and planning for foreign investors
4. Securing the tax benefits of opportunity zone investments
5. Best practices and tax planning techniques for counsel

The panel will review these and other key issues:

• What are opportunity zones and eligibility requirements under IRC 45D(e)?
• How can taxpayers ensure the deferral or reduction of capital gains and the appreciation exclusion?
• What are the key provisions of recent IRS proposed regulations for foreign investors in QOFs?
• What are the key issues impacting foreign investors and planning strategies to overcome them?
• Optimizing structures for opportunity zone investments

Learning Objectives

After completing this course, you will be able to:

• Recognize eligibility requirements for opportunity zones under IRC 45D(e)
• Determine tax benefits realized due to investment in opportunity zones
• Identify qualifying opportunity zone funds and businesses
• Ascertain methods to defer or reduce capital gains and the appreciation exclusion
• Uncover tax issues for foreign investors in QOFs

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Working knowledge and understanding of tax credits, sourcing rules; foundational knowledge of basis calculations and capital gains tax.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).