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What happens if Opportunity Zone investors want to exit simultaneously around the 10-year mark?

What if most QOF investors have met the holding period that allows them to optimize their tax benefits and want to exit at the same time?


Answers
  • Matthew Rappaport
    May 13, 2021

    This usually means the fund will sell the underlying assets, allowing the QOF equity holders to make an election to get the ten-year benefit. As a last resort, the regulations are unclear on this, but you might be able to trigger your own recognition event to step up the basis for income tax purposes while keeping control of the QOF equity (an example could be through selling to a non-grantor trust with a friendly trustee).

  • Maria De Los Angeles Rivera
    June 04, 2021

    The exit strategy must be something that is clear to all, investors and QOF since day one. The QOF may establish the process and how it will be accomplished in a way that all are benefited.

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