Anyone here use Opportunity Zones as a tax shelter? If so, what is your experience?

Like the C&I programs? You have to apply and meet certain criteria.

Also, if you have some sort of noncompliance issue, you are going to be bringing yourself to the forefront applying so it may not be a good idea for you.

You're post is kind of unclear though.

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An Opportunity Zone is a community nominated by the state and certified by the Treasury Department as qualifying for this program. The Treasury Department has certified zones in all 50 states; Washington, D.C.; and U.S. territories.1

There are approximately 8,700 Opportunity Zones nationwide. A list can be found at the U.S. Department of Housing and Urban Development.

How does this program work?
To defer a capital gain (including net §1231 gains), a taxpayer has 180 days from the date of the sale or exchange of appreciated property to invest the realized capital gain dollars into a Qualified Opportunity Fund. The fund then invests in Qualified Opportunity Zone property.

The taxpayer may invest the return of principal as well as the recognized capital gain, but only the portion of the investment attributable to the capital gain will be eligible for the exemption from tax on further appreciation of the Opportunity Zone investment, as explained below. The Opportunity Zone program allows for the sale of any appreciated assets, such as stocks, with a reinvestment of the gain into a Qualified Opportunity Fund. There is no requirement to invest in a like-kind property to defer the gain.

Note that a taxpayer who receives a reported capital gain from a flow-through entity, such as a partnership, an S-corporation, or a trust/estate, has 180 days from the end of the calendar year to make an investment in a Qualified Opportunity Fund, regardless of how early in the calendar year the entity itself realized its gain. For example, if a partnership entity realized a capital gain in March, each partner’s 180-day triggering date will be December 31 of the same year and each partner will have until approximately June 28 of the following year to make their Qualified Opportunity Zone investment.

Qualified Opportunity Fund

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In my limited research, you can park all capital gains here for a specified amount of time and basically eliminate taxes on your gains. I may be highly incorrect, and of course will speak to an advisor prior.

I am not real big on the idea on its face, but wanted to see if anyone has any experience.

I have some experience. Basically there are two benefits.

1) Rolled-in gains are deferred until Dec 31, 2026

2) If you stay in for 10 years, all gain is removed (basically you get a stepped up basis).

So if you want the gain to go away... you are locking up your money for 10 years.

Also, you need to check and see if your state tax law allows this for state taxes.

My thoughts (same I tell clients):

1) Do you want to lock your money up for 10 years?

2) What do you think the long term cap gain rate structure is going to be in 2026 and beyond, in case you get out.

3) Like any private investment, you need to be clear about the fees and expenses.

4) These funds are in investing in... well crappy areas. A lot of money can be made investing in real estate in crappy areas... a lot of money can be lost as well.

The ability to basically exclude several hundred thousand of cap gains from taxation certainly has a significant appeal... but you need to be willing to lock that money up for 10 years. Otherwise... you could be in a situation where yes you are deferring the tax but when you pay it, you are paying it at a higher rate (if tax rates go up).

Because this is still relatively new... none of my clients have gotten out of these yet... so I can't speak to that.

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A pretty large concern for me, and probably the number one reason I would not proceed.

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A problem has been capital finding areas in the zones that aren't crappy and exploiting what are basically loopholes in the designations. A UC Berkeley study showed that 50% of the money invested went to 1% of the zones, lol. Can't blame folks for using the system to their advantage.

Anyway, there's new bipartisan legislation in the works that would change the calculation for the zones to sunset those that are really not shitty and it is likely to pass this year crammed in some other legislation.