Compound is qualifying as an opportunity zone business
The Opportunity Zone legislation is part of the Tax Cuts and Jobs Act of 2017 and was designed to spur long-term, patient private capital investment and job creation in eligible low-income areas. New York City has about 300 designated opportunity zones, including several in Manhattan. Companies that operate their business in a designated opportunity zone can qualify under the safe harbors outlined in the most recent guidance provided by the IRS about Opportunity Zones.Learn more about
Compound is working to improve the diversity and inclusion of the real estate landscape. As a part of our mission, our main headquarters will be located on Manhattan’s Lower East Side in a designated opportunity zone. We look forward to spending money in the neighborhood, patronizing local restaurants and other small businesses and recruiting local talent.
Over the next 5 years, we estimate that Compound will create over 100 skilled jobs and generate millions in revenue in the neighborhood where we locate.
Bringing jobs and capital into the area will lead to increased spending at local businesses and spur the local economy of the neighborhood.
Defer tax on capital gains (from selling stock, real estate, art, cryptocurrency, etc.) until Dec 2026.
Reduce the amount of tax on the original capital gains by up to 15%.
Eliminate any tax on all new capital gains if held for 10 years or more.
After selling an appreciated asset (it could be stocks, bonds, business, real estate, cryptocurrency, yacht, art etc.), an investor must invest the money gained through the sale into an opportunity fund within 180 days of the sale, or if the gain is from an investment in an LLC or LLP, from the end of the tax year of the entity. Investors will then elect to defer their gains at the time of filing their 2019 tax returns by filing form 8949.
The original capital gain can be divided into different qualified opportunity funds. Please consult a qualified tax advisor to see how this applies to your personal situation.Learn more about
No assurances can be provided that Compound Asset Management, Inc. (“Compound”) will qualify as a Qualified Opportunity Zone Business (“QOZB”) or that, even if it does qualify, that any or all of the tax benefits will be available to any particular investor in Compound.
Moreover, the Opportunity Zone regulations may change in the future and there may be uncertainty as to how such regulations will ultimately impact Compound or investors in Compound. There can be no guarantee that investors will be able to take advantage of the potential tax benefits associated with Compound qualifying as a QOZB.
Evolving regulation of qualified opportunity zones may adversely affect us and our investors.
The qualified opportunity zone provisions of the Code were adopted as part of the 2017 Tax Cuts and Jobs Act which was enacted on December 22, 2017. As a result of its recent enactment, the related Treasury regulations continue to evolve. As a result, we can provide no assurance that the regulations relating to investments in QOZBs, such as Compound will remain the same in the future. In addition, subsequent regulations could restrict our operations or require us to modify our business objectives in a manner that would harm our business. Moreover, because this statute and the related regulations are relatively untested, they will likely be subject to varying interpretations and their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated to comply with any revisions in the provisions or interpretation of the rules.
Compound may decide that it is in the company’s best interest not to qualify as an opportunity zone business.
Although we intend to qualify as an opportunity zone business in 2019, our business may grow and evolve whereby we believe that it would benefit Compound if the company no longer qualified as an opportunity zone business. This decision may relate to our ability to recruit and maintain employees, our ability to attract investors, or general business operations. This decision to no longer qualify would impact an investor’s ability to take advantage of any tax benefits associated with Compound qualifying as an QOZB.