Qualified Opportunity Zone - DIY

Taxpayer, an individual, has sold real estate used in a trade or business on April 1, 2019 to an unrelated person and a capital gain was created. Also, a C corporation he owned, sold equipment used in the trade or business. The sales price from the real estate sale will be paid to him at a rate of $3,000 per month for a few years followed by a lump sum payment. Taxpayer also has other financial resources.

Taxpayer has found a trade or business opportunity just down the road and wishes to invest in the business, a restaurant. The facility is in an Opportunity Zone, was operated as a restaurant for 60+ years, but was not operated at all in 2019.

It seems that the taxpayer (and his wife) can form a partnership, or an LLC taxed as a partnership; invest an amount equal to his gain from the April 1 sale, in that partnership; and, by October 1; have the partnership buy the restaurant AND within 30 months make improvements to the building and equipment equal to the cost of the building. The partnership would self-certify as a QOF. Perhaps, for legal protection the partnership may own two LLC's, one that owns the building and one that operates the restaurant.

The taxpayer in his capacity as a partner, would manage the restaurant.

Am I missing some aspect of the law that would deny the taxpayer the deferral of the recognition his April 1 gain?

Am I missing some aspect of the law that would deny the taxpayer the deferral of the recognition his April 1 gain?

The taxpayer has an installment sale. How does that work with a QOF?

These QOZ's are exciting. I would love to know how other CPAs see them being used. Anyone setting up a QOZfund?

Post 2: I am thinking of an election out of the installment sale rules, report the entire gain on an 8949, and stick a "Z" in column (f).

Taxpayer has cash beyond the April 1 sale proceeds with which to make the investment in the restaurant.

Am I missing some aspect of the law that would deny the taxpayer the deferral of the recognition his April 1 gain?

I suggest you carefully review the rules around the beginning of the 180 day period in this article:

https://www.thetaxadviser.com/newslette ... rrals.html

Thanks for the article.

"Taxpayer, an individual, has sold real estate used in a trade or business on April 1, 2019 to an unrelated person and a capital gain was created."

Actually, I cleaned up the actual situation I posted on in order to focus on the DIY aspect of QOFs. The taxpayer has sold a bundle of real estate assets, some of which are probably section 1245 property. All the assets were lumped together as a single asset and assigned a 15 year life back in 1995. I am trying to obtain enough information to make a reasonable allocation among 1245 property (see 1245(a)(3)(B)) and buildings so that I can determine what gains are 1231 gains eligible for reinvestment and what gains are 1245 gains eligible for QBID (assuming the taxpayer qualifies in 2019 with only 3 months of ownership).

Now, it seems that my question changes a bit since the restaurant seller is in a hurry to sell and the taxpayer is in a hurry to buy and renovate before snowmobiling season. Perhaps the taxpayer needs to set up a QOF, have the QOF buy the property with deferred payment AND, then invest an amount equal to the eligible gain in "his" QOF next year.

A final twist is that some of the sale price from the April 1 sale is for land and is a capital gain which could be invested in 2019.

I seem to be spending a lot of my days studying minutiae in the hopes of avoiding technicalities; and applying such to ambiguous data.