Qualified Opportunity Funds May Face Anti-Abuse Regulations from IRS

Libin Zhang, tax department partner at Fried, Frank, Harris, Shriver & Jacobson LLP, participated in a video interview at Nareit’s REITwise: 2019 Law, Accounting & Finance Conference in San Antonio. Zhang was partner at Roberts & Holland LLP at the time of this video.

Zhang discussed qualified opportunity funds, including how existing owners can benefit and various tax considerations. He said that one area of significant uncertainty is any anti-abuse rule that the IRS may publish, noting that tax lawyers have come up with “very creative structures” over the past few months that may ultimately need to be addressed.

Regarding how to select the right qualified opportunity fund, Zhang said to consider whether a fund will actually make money.

“The real main benefit of the qualified opportunity zone regime is the 10-year tax-free exit that only kicks in if the fund investment makes money and there’s capital gain to exclude,” he said.