Employees with Concentrated Equity

Professionals with significant stock-based compensation or equity from company growth have a unique opportunity to diversify their wealth and potentially reduce tax liability through Opportunity Zone investing. By reinvesting capital gains from stock sales into Qualified Opportunity Zone Funds, they can defer capital gains taxes until 2027 and potentially eliminate taxes on any appreciation from the Opportunity Zone investment if held for 10 years.

This strategy not only provides a powerful tax shield but also allows tech executives to diversify into real estate and other long-term assets in emerging markets, aligning their financial planning with both stability and impact.

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.

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

OZ Tax Benefits*

1. Defer Original Capital Gains Tax
Upon investment into a QOF, the tax liabilities of eligible capital gains can be deferred until the investor’s 2026 tax return, payable April 15, 2027. Importantly, investors are not required to invest the entire capital gain, they can invest all or only a portion.

2. Eliminate Taxes on OZ Investment Gains
If the investor holds the QOF investment for at least 10 years, they can exclude capital gains tax liabilities on any new gains realized from that investment.

3. No Depreciation Recapture
With OZ investments, depreciation can be used to offset ordinary income tax liabilities like traditional real estate investments. However, OZ investments are not subject to recapture tax at the terminal sale.

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