BarbriSFCourseDetails
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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Wednesday, December 8, 2021

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will examine the tax and operational issues counsel must consider when structuring a qualified opportunity fund (QOF) for investment in a qualified opportunity zone (QOZ). The panel discussion will include the tax ramifications of capital structure, advantages of using a portfolio company vs. a one-off entity to make investments, exit strategies, and how to use sister companies to make investments outside an opportunity zone.

Faculty

Brad A. Molotsky
Partner
Duane Morris LLP.

Mr. Molotsky’s primary practice is focused in the areas of commercial leasing, acquisitions and divestitures, property management, financing, public private partnership and real estate joint ventures (including mixed-use development). He also has deep experience in board governance and managing public company issues such as enterprise risk, internal audit, compensation, proxy statement preparation and review, as well as energy efficiency and sustainability and corporate social responsibility. Previously for nearly 20 years, he served as executive vice president, general counsel and corporate secretary of Brandywine Realty Trust where he was responsible for all legal operations of the company, including acquisitions and divestitures, financings, joint ventures, board matters, insurance procurement, litigation oversight, SEC filing oversight and the legal aspects of capital raising.

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Joseph J. Scalio
Tax Partner
KPMG Law, LLP

Mr. Scalio is KPMG’s Pennsylvania Business Unit Tax Leader in the Passthrough and Asset Management Practices, KPMG’s Pennsylvania Business Unit Leader in the Real Estate Practice, KPMG’s U.S. Tax Leader in the Publicly Traded Partnerships (“PTPs”)/Master Limited Partnerships (“MLPs”) Practice, and KPMG’s U.S. Co-Tax Leader in the Umbrella Partnership Corporations (“Up-Cs”) Practice.

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Description

Tax reform created a new capital gains deferral and an exemption for taxpayers who make long-term investments in QOZs. The centerpiece of the legislation is a new type of investment vehicle called a QOF. Fund counsel must have a firm grasp of the structural nuances that can significantly affect a QOF's operations and tax liability.

A QOF must decide whether to invest in a QOZ business or property directly or hold its QOZ business through a subsidiary. Any business that aspires to either grow outside an opportunity zone or locate facilities (offices, factories, or warehouses) outside the zone must adopt a flexible entity structure.

Exiting a QOF investment requires meticulous planning. The QOZ tax exemption is only available if an investor sells its interest in the QOF. For a QOF organized as a partnership (most QOFs), the exemption does not apply when the QOF sells a QOF subsidiary or any other assets it owns or when the QOF or a subsidiary sells its assets.

Neither the Biden administration nor the current Congress is likely to make significant changes to the QOZ program. Still, they could add a reporting requirement for QOFs to demonstrate how their investments benefit their related QOZs. Tax law changes might include raising capital gains tax rates and elimination of Section 1031 exchanges, both of which could drive more investment in QOFs and QOZs.

Listen as our authoritative panel discusses these and other structural concerns with QOFs. The panel discussion will include allowing flexibility in operations, investment, and exit strategy while preserving the tax benefits intended under this new tax exemption.

Outline

  1. Qualified opportunity zones: new tax incentives for investment
  2. Qualified opportunity funds: investment parameters
  3. Structural considerations
    1. Capital investment
    2. Capital structure
    3. Portfolio company vs. direct investment
    4. Doing business outside of an opportunity zone
    5. Exit strategies

Benefits

The panel will review these and other noteworthy topics:

  • What is a QOF, and what are the investment parameters for taking advantage of the new tax exemptions?
  • When should a QOF consider a portfolio structure instead of making a direct investment in a QOZ business?
  • Are there circumstances under which a QOF can engage in business outside an opportunity zone? How should that be arranged?
  • What are the primary concerns in exiting a QOF investment?