Comprehensive opportunity zone counsel from formation to exit
Enacted as part of the Tax Cuts and Jobs Act of 2017, the Opportunity Zone program provides investors, fund managers, real estate developers, and business owners with incentives designed to facilitate long-term investment in economically distressed areas by deferring, and even eliminating, taxes associated with such investments.
In order to be eligible for such benefits, however, investors and sponsors alike must comply with a myriad of rules and regulations, including recently enhanced reporting requirements. Shumaker's Opportunity Zone team, a cross-disciplinary group comprised of tax, corporate, securities, fund formation, real estate, and construction lawyers, takes a multi-faceted approach to helping clients not only stay in compliance with such requirements but also maximize such tax benefits. Taking a holistic view of such transactions and coordinating across practice groups from inception allows Shumaker to anticipate clients' needs and avoid potential pitfalls when advising on the various issues opportunity zone clients face, including the following:
- Structuring and formation of Qualified Opportunity Funds and Qualified Opportunity Zone Businesses (including the often-overlooked related party rules and circular cashflow issues associated therewith)
- Securities law considerations when taking on outside capital (including mitigating onerous requirements for sponsors and protecting investors from inadvertent non-compliance)
- Negotiating the underlying acquisitions of real property (including development and construction matters associated therewith) and operating businesses (including bifurcating the acquisition of tangible assets from intangible assets to allow for seller rollovers in M&A transactions)
- Taking on financing from financial institutions as well as affiliate loan transactions, and, eventually, exit strategies (including potential reinvestments of sale proceeds therefrom)
Further, our lawyers can help clients combine opportunity zone benefits with other complementary tax incentives, such as the Qualified Small Business Stock incentives set forth in Section 1202 of the Internal Revenue Code, which can shorten the 10-year holding period for a tax-free exit to only 5 years.
With more than $1 billion in opportunity zone transactions under our belt, our team is well versed in all iterations of this program (including the recent updates established by the One Big Beautiful Bill Act) and ensure clients stay up to date on evolving requirements and incentives—such as the added tax benefits for investment in rural areas. With the guidance of our knowledgeable, proactive legal counsel, clients can seize the opportunities of this unique program while navigating regulatory hurdles with confidence.
Click here to view an interactive map of qualified opportunity zones throughout the U.S.
Our Experience
- Representing family offices with respect to several Opportunity Zone transactions, including an investment in an Opportunity Fund that is developing and will operate a hospitality-anchored mixed use project in the Rocky Mountain region of the United States
- Representing numerous private individual investors with respect to the acquisition and development of properties located in Opportunity Zones, including advising on appropriate deal structures to qualify for the tax incentives of the Opportunity Zone program
- Representing a Florida-based real estate developer and sponsor in connection with creating an Opportunity Fund for the development of a large, multi-family project in Central Florida, including drafting and negotiating joint venture documents, subscription agreements, and disclosure statements with its various investors
- Representing a family office with respect to qualifying a new business venture for the tax incentives of the Opportunity Zone program
