Investment Funds and Opportunity Zones – the Ins and Outs of OZs

Maximizing Tax Benefits and Preserving Flexibility

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, February 13, 2020

Recorded event now available

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Program Materials

This CLE webinar will examine the tax and operational issues counsel must consider when structuring a qualified opportunity fund (QOF) for investment in a qualified opportunity zone (QOZ). The panel discussion will include the tax ramifications of capital structure, advantages of using a portfolio company vs. a one-off entity to make investments, exit strategies, and how sister companies can be utilized to make investments outside an opportunity zone.


Tax reform created a new capital gains deferral and an exemption for taxpayers who make long-term investments in QOZs. The centerpiece of the legislation is a new type of investment vehicle called a QOF. Fund counsel must have a firm grasp of the structural nuances that can significantly affect a QOF's operations and tax liability.

A QOF must decide whether to invest in a QOZ business or property directly or whether to hold its QOZ business through a subsidiary.

Any business that aspires to either grow outside an opportunity zone or locate facilities (offices, factories, or warehouses) outside the zone will need to adopt a flexible entity structure. Business expansion may have to be facilitated through the use of sister companies that are owned outside a QOF structure or through independent service providers.

Exiting a QOF investment requires particularly careful planning. The QOZ tax exemption is only available if an investor sells its interest in the QOF. For a QOF that is organized as a partnership (most QOFs), the exemption does not apply when the QOF sells a QOF subsidiary or any other assets it owns, or when the QOF or a subsidiary sells its assets.

Listen as our authoritative panel discusses these and other structural concerns with QOFs. The panel discussion will include how to allow for flexibility in operations, investment, and exit strategy while preserving the tax benefits intended under this new tax exemption.



  1. Qualified opportunity zones: new tax incentives for investment
  2. Qualified opportunity funds: investment parameters
  3. Structural considerations
    1. Capital investment
    2. Capital structure
    3. Portfolio company vs. direct investment
    4. Doing business outside of an opportunity zone
    5. Exit strategies


The panel will review these and other noteworthy topics:

  • What is a QOF, and what are the investment parameters for taking advantage of the new tax exemptions?
  • When should a QOF consider a portfolio structure as opposed to making a direct investment in a QOZ business?
  • Are there circumstances under which a QOF can engage in business outside an opportunity zone? How should that be arranged?
  • What are the primary concerns in exiting a QOF investment?


Molotsky, Brad
Brad A. Molotsky

Duane Morris

Mr. Molotsky’s primary practice is focused in the areas of commercial leasing, acquisitions and divestitures,...  |  Read More

Scalio, Joseph
Joseph J. Scalio

Tax Partner

Mr. Scalio is KPMG’s Pennsylvania Business Unit Tax Leader in the Passthrough and Asset Management Practices,...  |  Read More

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