Qualified Opportunity Fund Glossary

The period of time during which an investment in a QOF must be held to qualify for maximum tax benefits.

The period of time during which capital gains must be invested in a QOF to qualify for tax benefits.

The date on which a QOF acquires a qualified opportunity zone asset.

A period during which a QOF must determine whether it is meeting the substantially-all test.

Capital Gain Tax refers to the tax imposed on the profit realized from the sale of an asset that has increased in value over time. In the context of a 1031 exchange, a capital gain tax would apply to the difference between the sale price of the original property and its adjusted basis (i.e., the original cost plus any capital improvements made during ownership).

However, if the property owner uses the proceeds from the sale of the original property to acquire a like-kind replacement property through a 1031 exchange, they may be able to defer paying capital gain taxes on the sale of the original property until the sale of the replacement property. This allows them to reinvest the full sale proceeds into the new property, thus maximizing their investment potential.

A provision that allows a QOF to disregard small amounts of non-qualifying assets when calculating compliance with the substantially-all test.

An investment in which the investor loans money to the entity in which they are investing.

Capital gains that are not immediately taxed but are instead deferred until a later date.

The decrease in value of an asset over time, used for tax purposes.

A payment made by a corporation to its shareholders.

Capital gains that can be deferred through investment in a QOF.

An investment in which the investor acquires an ownership interest in the entity in which they are investing.

Documents that show the financial position and performance of a business, including income statements and balance sheets.

A partner in a partnership who has management responsibility and is personally liable for the partnership's debts.

The period of time during which an investment is held.

Property that does not have a physical presence, such as patents, trademarks, or copyrights.

The cost of borrowing money, paid by the borrower to the lender.

The body of law that governs federal taxation in the United States.

An individual or entity that invests in a QOF.

The amount of money invested by an investor in a QOF.

The amount of profit or return on investment earned by an investor in a QOF.

The legal protection that limits the personal liability from debts and obligations of an investor to the amount of their investment.

A type of business structure that combines the liability protection of a corporation with the tax pass-through treatment of a partnership.

A partner in a partnership who contributes capital but has limited liability and no management responsibility.

A type of partnership in which there are one or more general partners who manage the business and are personally liable for its debts, and one or more limited partners who contribute capital but have limited liability.

The value of a fund's assets minus its liabilities, divided by the number of shares outstanding.

Financial assets such as stocks, bonds, and other securities that do not qualify as qualified opportunity zone property.

Property that does not qualify for tax benefits when located in an opportunity zone.

A legal document that provides information to potential investors about a QOF.

A document that outlines the rights and responsibilities of the members of an LLC or partnership.

The costs associated with operating a property, such as utilities, maintenance, and management fees.

A designated geographic area that is eligible for investment through a QOF.

A business that operates in an opportunity zone and meets certain criteria for investment by a QOF.

The first use of a property in an opportunity zone, either as new construction or as the renovation of a vacant property.

The date on which a property is first placed in service in an opportunity zone.

A business that was operating in an opportunity zone before it was designated as an opportunity zone.

A guaranteed minimum return on investment for certain investors in a QOF.

The sale of trust certificates or other securities to a limited number of accredited investors, without registration with the SEC.

In proportion to an investor's ownership percentage.

A type of investment vehicle designed to encourage economic development and investment in low-income communities.

A business that is located in an opportunity zone and meets certain requirements for investment by a QOF.

Tangible property used in the active conduct of a trade or business located in an opportunity zone.

An investment vehicle designed to invest in qualified opportunity zone property.

A partnership that invests in an opportunity zone and meets certain criteria for investment by a QOF.

Stock in a corporation that meets certain criteria for investment by a QOF.

Any tangible property located in an opportunity zone, including real estate and equipment.

A person or entity that is related to a QOF, such as a shareholder, partner, or family member.

The amount of profit or return earned on an investment, expressed as a percentage of the initial investment.

An owner of stock in a corporation.

An increase in the cost basis of an asset, which reduces the amount of capital gains tax owed when the asset is sold.

A legal document that outlines the terms of an investor's investment in a QOF.

Improvements made to a property that increase its value by at least the amount of the original purchase price.

A requirement that at least 90% of a QOF's assets be invested in qualified opportunity zone property.

The pooling of resources from multiple investors to invest in a QOF.

A community that is eligible for investment through a QOF.

The advantages, such as tax deferral or reduction, that result from investing in a QOF.

A dollar-for-dollar reduction in a taxpayer's tax liability.

A benefit offered by the government to encourage a certain behavior, such as investment in an opportunity zone.

The amount of tax owed by a taxpayer to the government.

The period of time during which a taxpayer calculates their income and tax liability.

An individual or entity that is subject to taxation.

The process of evaluating the risk and potential of an investment.

The process of determining the value of an asset or investment.

A provision that allows businesses in opportunity zones to hold cash or other liquid assets for a certain period of time without violating the requirement that they have a certain percentage of their assets invested in qualified opportunity zone property.