February 5, 2023

Volume XIII, Number 36

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February 03, 2023

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February 02, 2023

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Mark Your Calendars for December 31

As the end of the year is approaching, December 31 is marked as an important day for investors. This is the last day to invest in a Qualified Opportunity Zone Fund (QOF) and receive the full 15% discount on the tax from the invested gain, recognized on Dec. 31, 2026, and paid in 2027. It also is the first testing date for many QOFs.

Capture Opportunity Zones Full Benefits

December 31, 2019 is the last date to receive the full benefits of the Opportunity Zones program. Starting January 1, there is an additional 5% step up in basis meaning that investments of capital gains made after the end of the calendar year will miss out on the benefit of receiving 100% deferral of that capital gain for as long as the QOF is active, up to a period of seven years. If you have gains and are considering investing in an Opportunity Zone, time is limited to get your money into a QOF and take advantage of the maximum benefit offered by Opportunity Zones.

1231 Gains

December 31, 2019 is also the first day that 1231 gains can be invested in a QOF. Starting on this day, calendar year taxpayers are allowed to invest net Section 1231 gain in QOFs during the 180-day period beginning on December 31 of the taxable year during which the gain is realized. This provides for an investment window of net Section 1231 gains from December 31, 2019 through June 28, 2020. However, December 31, 2019 is the only day that 1231 gains can be invested into a QOF while receiving the maximum benefit.

Additionally, for investors holding convertible debt and would like to invest in a QOF, there is still time to convert the debt into equity. QOFs are typically limited to equity investments.


We are only a few weeks away from the testing date for all QOFs. Whether your election to be a fund was in 2018 or 2019, all QOFs will be required to meet the annual testing requirements by December 31, 2019.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume IX, Number 351

About this Author

Korb Maxwell, Polsinelli, Tax lawyer

Economic development projects are the focus of Korb Maxwell’s practice. He has negotiated, secured approval of, and documented hundreds of millions of dollars in incentives for his clients’ projects in every asset class of real estate.

Korb’s area of concentration is on large-scale development and employment projects that utilize complex federal, state, and municipal development incentives. His experience in working with municipalities and states in structuring and implementing incentive packages provides him with insight and practical experience that benefit clients’ real estate,...

Jeffrey Goldman, Polsinelli Law Firm, Chicago, Tax Law Attorney

Jeffrey Goldman has a wealth of experience in taxation of business enterprises, including corporate and partnership taxation, state and local tax, international tax and tax controversy. He has more than 25 years of experience representing clients in complex tax matters.

Jeff frequently advises clients on structuring complex domestic international transactions; mergers and acquisitions; and financing transactions, restructurings, and reorganizations. He also handles complex tax controversies at audit, before the IRS Appeals Division and in court...

Patrick O'Bryan , Tax Attorney, Polsinelli Law Firm, Kansas City, Missouri

Patrick O’Bryan has significant experience working with clients on all aspects of their federal income tax needs.  He strives to make sure that taxes don’t get in the way of the economic deal and works to find innovative solutions to tax issues that meet the client’s financial objectives.

He has vast experience advising clients on how to minimize tax liabilities, including a focus on the following areas:

  • Structuring and advising real estate clients throughout the life-cycle of their investment, with significant experience working...