ThinkAdvisor reports that most financial advisors know little about the opportunity zones section of the new tax cut legislation, which can be problematic when they have clients interested in impact investing. Partner Stuart Saft provided insight for their article on the significance of and confusion surrounding Section 1400Z, which is designed to promote economic development in low-income neighborhoods through private tax-advantaged equity investments.
Mr. Saft brought attention to the fact that advisors also need to remember that eventually investors will need to pay the tax on the capital gains that are initially rolled over into an opportunity zone fund. He added that, while these funds are "conceptually a terrific idea" to help communities and taxpayers, investors will "still owe capital gains tax on the original investment."
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