What Is An Opportunity Zone and What Can They Do for Wyoming?
Tuesday, June 25, 2019
Opportunity Zones are a hot topic right now and if you missed our recent webinar, you may be wondering what they are and how they can impact Wyoming.
What You Need to Know About Opportunity Zones
#1 How they were created
Opportunity Zones were created as part of the Federal Tax Cuts and Jobs Act of 2017 (Jobs Act). The purpose was to direct private investment into areas of the country that have not experienced a high level of economic growth and prosperity. By attracting private investment, these areas will have greater opportunities to grow and thrive.
In Wyoming, the governor proposed 25 specific census tracts to be designated as Opportunity Zones, all of which have been certified by the U.S. Department of the Treasury. The Wyoming Business Council has a search tool that makes it easy to find Opportunity Zones within the state. Click here to search.
#2 How to invest
After realizing a capital gain, investors must deposit money into a Qualified Opportunity Fund within 180 days. The Fund can be a new or existing business, per the IRS. The money must then be distributed to an Opportunity Zone project.
Communities across Wyoming should prepare prospectuses to present to investors in order to capture their interest in investing into their specific Opportunity Zone project.
#3 The benefit to investors
The Act allows investors to defer all or part of their capital gains when they are invested into a Qualified Opportunity Fund located within an Opportunity Zone. This gain would traditionally be included in an investor’s taxable income. By investing it into a QO Fund, the gain is deferred until December 31, 2026 or when it is sold or exchanged. In addition, by keeping the investment in the QO Fund for ten years, it could be permanently excluded.
Essentially, the Federal Tax Cuts and Jobs Act of 2017 (Jobs Act) has made it possible for individual investors, corporations and trusts to benefit from current economic gains without immediately paying capital gains tax. Those liquidating stocks or selling properties, for example, can invest their gains into Opportunity Zone Funds and instead of paying capital gains tax, have that tax deferred, reduced or even eliminated over time.
#4 Potential for Wyoming
Because investors are actively looking for Opportunity Zone projects, Wyoming communities are positioned to present their projects and attract investment from those who may be unfamiliar with Wyoming. In addition, there are opportunities to attract investment into established Wyoming businesses who could grow with an influx of capital. Both can create jobs and economic prosperity within the region. “Opportunity zones have the potential to attract business and improve prosperity in communities. As Wyoming works to diversify its economy and spark growth in cities and towns, investment in these areas provides additional incentives,” said Governor Matt Mead.
For more information on Opportunity Zones, visit the Wyoming Business Council’s website. You can also email Brittany Ashby at firstname.lastname@example.org.
To learn more about recent legislation, read our article about updated IRS guidelines for Opportunity Zones. To learn how to market your Opportunity Zone, read “How to Market Your Opportunity Zone.”