Hedge Fund/PE/VC Principals

Venture capital, private equity, and hedge fund principals can strategically leverage Opportunity Zone (OZ) investing to defer and potentially reduce capital gains realized from their carried interest or other partnership gains. Under current IRS rules, capital gains recognized through K-1 distributions – whether from the sale of portfolio companies, fund assets, or secondary interests – are eligible for OZ reinvestment if deployed within 180 days of recognition.

By rolling those gains into a Qualified Opportunity Fund (QOF), principals may defer federal taxes until 2026 and eliminate capital gains on the new OZ investment if held for 10 years. This creates a compelling tax-advantaged strategy for managing liquidity events while reallocating into real assets with long-term growth potential.

About the Opportunity Zone Program

Qualified Opportunity Zones (OZ) were created as part of the Tax Cuts and Jobs Act of 2017.

These zones were designed to spur economic development and job creation in communities throughout
the country by providing tax benefits to investors with eligible capital gains.

The OZ program incentivizes long-term investment to revitalize underserved, often underdeveloped
communities across the U.S.

Eligible Gains

Investors have 180 days from the day the capital gains event occurs to invest into a Qualified Opportunity Zone Fund.

OZ Tax Benefits*

*These tax benefits are associated with the current OZ program (OZ 1.0), effective through 12/31/2026.