In Conversation with Nick Gibbons, CPA at Armanino: Top 25 Opportunity Zone Tax Questions
by Angela S. Hwang, on May 6, 2021 12:08:56 PM
Are you thinking about investing in our Opportunity Zone Fund but still have some questions? Look no further – Urban Catalyst is always here to guide you!
Our Founder, Erik Hayden, recently sat down with CPA Nick Gibbons to discuss the 25 Most Asked Opportunity Zone Tax Questions. Nick is a Partner at Armanino, and with his 17+ years of experience, he is a great resource for all tax-related questions.
In this Q+A, Nick went into great detail about the origins of the Opportunity Zone Program and the tax benefits that it offers to investors. Be sure to watch the full video to find answers to the following questions:
- 0:54- The Opportunity Zone Program is new. Can you describe when it was finalized?
- 3:45- Can you describe what a capital gain is vs ordinary income?
- 3:45- Why did the government choose capital gains for the Opportunity Zone Program?
- 7:00- Do I have to invest all of my capital gains into one fund?
- 8:39- What are the most common ways that people have a capital gains event? (Sale of stock, sale of real estate, and sale of a business)
- 12:46- I’ve heard about the three main tax benefits associated with the program - can you discuss those main benefits?
- 16:49-What is the biggest tax benefit associated with investing into the Opportunity Zone Program?
- 18:49- Does the Program also work for short term capital gains?
- 20:58- Why is the Opportunity Zone Program so popular with investors who have a capital gains event from a sale of stock?
- 23:57- As a tax expert, what would you say is the main advantage of a Fund structured as an LLC vs a REIT?
- 26:09- Urban Catalyst being structured as an LLC allows our investors to take advantage of three major programs:
- 28:13- Can you talk about depreciation and depreciation recapture in the context of an Opportunity Zone Fund?
- 31:23- Is there no depreciation recapture for the Opportunity Zone Program? Do these passive losses convert to active losses and can offset ordinary income?
- 32:46- A very important part of the opportunities on strategy has to do with refinance distributions. Are those refinance distributions taxable? If not, why not? And how does this work?
- 35:46- A lot of our investors have other investments, of course, and they’re getting multiple K-1s per year.
- 38:19- What are some of the recommendations that you are providing to your clients who have a stock gain?
- 39:43- A lot of our investors from the first fund, their capital gains event was from a sale of stock; many of them come from working for their company stock options; can you describe the difference in ownership stock?
- 43:12- As we know, the IRS set the program up so that you only get that third key benefit after you’ve held your investment for 10 full years. Do we know exactly what the IRS’ reasoning was on having that specific 10-year date?
- 45:48- Does California conform with the national program and how does that affect our investors who live in-state vs out of state?
- 48:47- It sounds like this program has some amazing tax benefits associated with it; when you recommend the Opportunity Zone Program to your clients, what are the most important things that you look for?
- 49:43- What tax forms do investors need to submit to let the federal government, the state government know that they’ve invested in a Qualified Opportunity Fund?
- 52:19- Why did you decide to recommend us vs other OZ Funds?
Interested in learning more? Contact us today and let's get you started!
The statements, views, and opinions expressed herein are those of the individuals making the statements and do not necessarily reflect the official policy or position of Urban Catalyst Manager LLC or any investment sponsored by Urban Catalyst LLC and are provided for informational purposes only and are not intended to be, nor should be construed or used as financial, legal, tax or investment advice, nor should this information be used or considered as an offer to sell or a solicitation of any offer to buy any interest in Urban Catalyst Opportunity Fund I LLC (the “Fund”), an investment sponsored by Urban Catalyst LLC (the “Sponsor”).
THIS MATERIAL IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES. THE OFFERING AND SALE OF INTERESTS IN URBAN CATALYST OPPORTUNITY FUND I LLC (“URBAN”) IS BEING MADE ONLY BY DELIVERY OF URBAN’S PRIVATE PLACEMENT MEMORANDUM (“PPM”), CERTAIN ORGANIZATIONAL DOCUMENTS, SUBSCRIPTION AGREEMENT AND CERTAIN OTHER INFORMATION TO BE MADE AVAILABLE TO INVESTORS (“OPERATIVE DOCUMENTS”) BY URBAN’S SPONSOR. ONLY ACCREDITED INVESTORS CAN INVEST. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. INVESTMENTS IN SECURITIES ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK, AND ARE NOT SUITABLE FOR ALL INVESTORS. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX AND LEGAL PROFESSIONALS PRIOR TO MAKING INVESTMENT DECISIONS.