On January 1st, 2017, the Tax Cuts and Jobs Act became law and represents one of the largest tax break packages in American history. The Act contains significant changes to income tax, tax brackets, tax processes, and the creation of Opportunity Zones. These zones are a vehicle to engineer development in struggling communities and provide an unparalleled tool to reduce a business’s taxable gain.
What is a zone?? Zones are census tracts in each state that suffer substantial economic depression, defined as a poverty rate of 20%, or a median family income at or below 80% of the median statewide.
How do zones benefit business? The tax benefits zones offer outweigh almost every other type of investment. This package of tax incentives has already begun attracting investors, meaning more money going into these areas, which means more business. This is a secondary benefit when compared to the staggering amount of financial gain businesses can see themselves when they invest in a zone. The dynamic and multi-faceted appeal of this incentive is the variety of tax benefits that are available to businesses, enabling them to successfully combat their tax liability in a myriad of ways.
There are only two steps necessary for an individual to engage in an Opportunity Zone. One, within 6 months of realising capital, invest it in an Opportunity Fund. O-Funds are simply an investment portfolio dedicated to improvement within the Opportunity Zone itself. Step two, leave the capital there for a minimum of 5 years, although 7, 10, or 20 years earns a much better result. Deposit some capital in and O-Fund, and watch it work. That is really the only requirement to begin gaining staggering tax benefits through Opportunity Zones. A business can then receive a temporary deferral of paying capital gains on their investment, a step up in basis depending on how long the funds are held, and a potential permanent exclusion from paying capital gains on the fund total.
The Economic Innovation Group calculated that if held for the 10-year period, assuming normal economic circumstances, investing in an Opportunity zone would yield $44 more dollars for every $100 in capital gains they rolled into an O Fund versus a more traditional stock portfolio.
Areas have already seen appreciation in homes, real estate sales increasing, and galvanised investment firms beginning to amass funding. Contact us today to learn how you can take advantage of OZ’s and follow the yellow brick road to less tax and more business.


Contact CCC to see how we can save your organization time and money.
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(800) 207-6926

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