Alternative InvestmentsTax Planning

URGENT – Section 1231 Property & Qualified Opportunity Zone Update

Video Transcript

Hi, I’m John Weninger, CERTIFIED FINANCIAL PLANNERTM, and Fiduciary Wealth Advisor at Endowment Wealth Management. If you’re interested in learning how to defer and potentially reduce your capital gains liability then I suggest continuing to watch
today’s video.

In particular, I wanted to talk about today recent IRS clarifications on the types of assets and gains that can be invested into
Qualified Opportunity Zone Funds. If you don’t know, Qualified Opportunity Zones are a creation of the 2017 Tax Cuts & Jobs Act. They allow you the potential to reduce your taxable capital gains by up to 15%, among other benefits to investing in a QOZ fund.

In particular, one thing that the IRS recently clarified is that Section 1231, which is property used in business – if you sold that property
and you have a gain, that gain is eligible to be invested in Qualified Opportunity Zone
Funds. So that is step number 1. The one point to clarify on that, and I wrote
it on the board, is that the gain must be netted with 1231 losses.

So, you can’t just take the gross gain and invest that in a QOZ, it needs to be netted with 1231 losses, if any. So, take your 1231 gains, subtract your 1231
losses. If you have a NET GAIN on your 1231 property, asset, you may be eligible to invest that into a Qualified Opportunity Zone Fund and,
in effect, potentially obtain the tax benefits of doing so. That’s really point number 1.

Now, normally with a Qualified Opportunity Zone, when you sell a piece of property (asset) at a gain, whether it be a stock, or any other
type of property – they’re very flexible on the types of assets you can invest into a QOZ (fund) – normally you have 180 days from the date of sale in order to re-invest those funds, but the 2nd thing they (IRS) clarified is that since you need to NET 1231 gains with 1231 losses, the 180 day window doesn’t begin until the end of the tax year so 12/31.

Okay, so that’s step number 2, which leaves open an opportunity if you sold 1231 assets in 2018 and you experienced a NET GAIN. The 180 day window didn’t start until 12/31/18, meaning, you have until June 28th, about less than a month away to reinvest those gains into Qualified Opportunity Zone Funds and potentially reduce your taxable gain by up to 15% – so that’s why it’s a very important topic to note is that there is a time period here that we have and you may not have known that those gains were eligible to be deferred.

So, if you don’t know much about QOZs or QOZ Funds, our investment team here at Endowment Wealth Management is doing all the due diligence and determining which funds to invest in, so we’ve got that going on, and then if you have this type of property that you have a gain on and you’re not sure I recommend number one discussing and bringing it up to your CPA or tax advisor and number two, I’m happy to get on the phone with you and your tax advisor to discuss whether or not this is even a possibility.

But it’s something to look into, given the  potential tax benefits of investing in a QOZ.

So, if you want to learn more, check out our website, we’ve got www.EndowmentWM.com/QOZ, all the information and links on QOZ funds
and investing is there.

If you have questions and want to discuss your personal situation, please feel welcome to shoot me a message, comment or give me
a call at 920-785-6886 and we’ll see if we can get you moving in the right direction.

So, until next time, take care. Thanks!

Have Questions? Need an expert opinion?

If you have more questions I’m happy to help you! We make getting answers super easy, without having to talk to some high-pressure sales person. Just use the secure contact form to ask a question, or email me directly at John@EndowmentWM.com, and I’ll get back to you via email within 48 hours to help point you in the right direction. I also offer a free wealth discovery meeting where we can discuss your personal situation and make sure you’re on the right path. Remember, it’s free to contact us and we are fiduciary advisors putting your personal needs first and foremost.

Best of Success,

John Weninger, CFP®
Wealth Advisor
Endowment Wealth Management, Inc.

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John Weninger, CFP®

John Weninger, CFP®

John is a Wealth Advisor within the Family Wealth Management area of the Company. He is the first point of contact for our prospective clients, conducting introductory meetings with clients to discuss their family dynamic and wealth management needs. John assumes the role of the client family’s Chief Financial Officer and coordinates with the client’s current professionals (i.e. attorney, tax accountant, stockbroker, insurance agent) to provide an integrated wealth management plan and investment solution that is custom tailored to meet each client’s specific needs. John began his career at Merrill Lynch as an advisor assistant, serving the needs of families & small business owners. He was the founder of Vision Wealth Partners, a Wisconsin registered investment advisor and has been helping families and small-business owners with financial planning and investment management since 2011. His writing has been featured on CNBC, Yahoo! Finance, U.S. News and MyCompanyRetirementPlan.com. John received his Bachelor’s Degree from St. Norbert College majoring in Finance. He earned his Certified Financial Planner (CFP®) in 2017.