Opportunity Zone Magazine Opportunity Zone Magazine Volume 1, Issue 1 | Page 51

QUALIFIED OPPORTUNITY FUNDS: COMPARE & CONTRAST DIRECT & INDIRECT INVESTMENTS
strategy of your fund can help drive your preference to using
one structure versus the other. For a multi-asset real estate
fund, the indirect investment method might more closely
mirror a traditional fund structure and allow for better
management of cash flow. For a fund is investing in an
operating business that uses e-commerce or is a tech start-
up, the direct investment method might provide protection
from the gross income requirements.
The first round of proposed regulations can be relied on until
final guidance is issued. There is at least one more round
of proposed regulations on the way and additional work
upcoming to convert proposed regulations to final status. As
the clock is running on utilizing the maximum tax benefits
under this incentive, many fund managers are finding their
way forward regardless of the uncertainties.
Our attorneys help guide
developers, investors, business
and property owners, and other real
estate participants on Opportunity
V alerie G runduski is a real estate tax specialist and the firm
leader of Plante Moran’s Opportunity Zones practice. She works
with multi-entity tax engagements, including residential and
commercial property portfolios, REITS, investment funds and
family owned real estate developers. Grunduski’s tax experience
includes consulting related to real estate professionals,
partnership restructuring, cancellation of debt planning, partner
transactions and various incentives. She is a member of
the Urban Land Institute (‘18 Larson Leader) and the Detroit
Economic Club as well as a participant in Commercial Real
Estate Women Detroit.
Zone investments and projects.
Centre Square West
161 North Clark Street
1500 Market Street, 38th Floor
Suite 4200
Philadelphia, PA 19102
Chicago, IL 60601
Sources:
1
Note that the indirect structure prohibits a QOF from investing in another QOF.
2
Substantial improvement requires additions to basis of the property by the QOF within a
30-month period after acquisition that exceed the QOF’s adjusted basis in the property at the
beginning on such period.
3
These “sin businesses” include golf courses, country clubs, massage parlors, hot tub facilities,
suntan facilities, racetracks, gambling establishments and stores whose principal business is
the sale of alcohol for consumption off premises.
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