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Qualified Opportunity Zones (QOZ)
Transforming Investment into Community Impact Through Strategic Tax Incentives
The Qualified Opportunity Zone (QOZ) program, established under the 2017 Tax Cuts and Jobs Act, offers investors a powerful tool to drive both economic development and financial performance. Designed to encourage long-term investment in economically distressed communities, the QOZ framework allows for significant tax deferrals and potential exclusions on capital gains. Investors who reinvest eligible gains into Qualified Opportunity Funds (QOFs) can achieve both portfolio growth and meaningful social impact.
At SJKP LLP, our multidisciplinary Opportunity Zones team—comprising attorneys from our Tax, Real Estate, Construction, Corporate & Securities, Environmental, Finance, Trusts & Estates, and Public Policy practices—advises fund sponsors, institutional investors, developers, and entrepreneurs on every aspect of QOZ investment. We combine technical tax knowledge, transactional experience, and policy insight to help clients realize the full potential of this transformative program while maintaining strict compliance with IRS and Treasury regulations.
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1. Understanding Qualified Opportunity Zones
A Catalyst for Economic Growth and Tax-Efficient Investment
Qualified Opportunity Zones were created to channel private capital into underserved regions designated by U.S. states and territories. Investors who reinvest gains from asset sales into QOFs within 180 days can defer federal capital gains tax until 2026 and may permanently exclude additional appreciation from taxation if the investment is held for at least 10 years.
Our lawyers advise clients on structuring QOFs and underlying investments to meet statutory and regulatory requirements. We help identify eligible assets, navigate the 90% asset test, and design transactions that balance community development goals with investor returns.
Key Benefits of QOZ Investments
- - Deferral of Capital Gains: Reinvest eligible gains within 180 days and defer taxation until December 31, 2026, or earlier disposition.
- Step-Up in Basis: Receive up to a 10% increase in basis for investments held at least five years (subject to current legislative updates).
- Exclusion of Appreciation: After a 10-year holding period, appreciation in QOF investment can be permanently excluded from capital gains taxation.
- Portfolio Diversification: Access to real estate and operating business investments that align financial growth with measurable community impact.
- Public and Private Incentives: Combine QOZ benefits with other programs—such as Low-Income Housing Tax Credits (LIHTC), Historic Rehabilitation Tax Credits, New Markets Tax Credits, and Renewable Energy Tax Credits—for enhanced returns.
We guide clients through these benefits to ensure optimal alignment between tax efficiency, business strategy, and social responsibility.
2. Structuring Qualified Opportunity Funds (QOFs)
Compliant Design and Strategic Implementation for Long-Term Success
Forming and managing a Qualified Opportunity Fund requires careful attention to tax rules, entity governance, and asset qualification criteria. SJKP LLP assists sponsors, managers, and investors in establishing QOFs that meet the 90% test for Qualified Opportunity Zone Property and comply with ongoing reporting obligations.
We design investment vehicles that integrate seamlessly with client objectives—whether focused on real estate development, operating businesses, or hybrid structures combining both. Our lawyers work across disciplines to ensure proper fund formation, securities compliance, and investor disclosures while coordinating with accountants, appraisers, and community stakeholders.
QOF Formation and Compliance Services
- - Entity formation and QOF certification under IRS guidelines.
- Structuring Qualified Opportunity Zone Businesses (QOZBs) for real estate or operating investments.
- Drafting private placement memoranda (PPMs) and investor documentation.
- Advising on capital calls, subscription agreements, and compliance reporting.
- Coordinating with accountants on the 90% test, valuation, and audit procedures.
- Assisting with Treasury updates, safe harbor provisions, and IRS interpretive guidance.
Our team ensures that every QOF structure satisfies legal requirements while maximizing investment flexibility and investor confidence.
3. Real Estate and Development Opportunities
Building Communities and Portfolios Simultaneously
Real estate projects remain a cornerstone of the QOZ program. Developers, investors, and community organizations can all benefit from the incentives that accompany redevelopment in designated zones. SJKP LLP represents clients in affordable housing, mixed-use, hospitality, industrial, and renewable energy projects financed through QOF capital.
Our attorneys advise on zoning, land use, construction contracts, and environmental compliance to ensure that development proceeds smoothly and sustainably. We also help clients secure additional incentives, including tax credits, grants, and municipal support for public-private partnerships.
Real Estate and Construction Experience
- - Structuring joint ventures between developers, investors, and municipalities.
- Negotiating land acquisition, construction, and lease agreements.
- Securing financing through tax-exempt bonds, credit facilities, and layered incentives.
- Advising on environmental and historic preservation compliance.
- Managing public-private partnerships for community redevelopment.
We deliver integrated counsel that aligns project design, financing, and long-term management with the unique regulatory requirements of the QOZ program.
4. Operating Businesses and Innovation Initiatives
Driving Job Creation and Economic Renewal Beyond Real Estate
While real estate remains a core focus, QOZ investments also support operating businesses that create jobs and spur local innovation. SJKP LLP advises startups, growth companies, and investors on structuring Qualified Opportunity Zone Businesses that meet the “substantial improvement” and “active business” requirements.
We help clients evaluate whether their business models, asset locations, and workforce composition satisfy QOZ eligibility criteria. For technology, manufacturing, renewable energy, and service sector ventures, we structure equity participation, financing, and partnership agreements that maximize both operational flexibility and tax advantage.
Supporting Growth and Compliance for Operating Businesses
- - Evaluating eligibility under the “substantially all” and “50% gross income” tests.
- Structuring equity and debt instruments to meet QOZ investment standards.
- Advising on capital deployment timelines and reinvestment requirements.
- Coordinating with local economic development authorities and innovation hubs.
- Integrating ESG and workforce development strategies for sustainable growth.
By aligning legal compliance with business strategy, we help clients unlock the full
potential of the QOZ program to fuel long-term community renewal.
5. Integrating QOZs with Other Incentive Programs
Maximizing Returns Through Layered Incentive Structures
Many QOZ investors enhance project viability by combining Opportunity Zone benefits with other federal, state, and local incentives. SJKP LLP’s tax and finance teams have deep experience coordinating QOZ investments with credits such as LIHTC, Historic Tax Credits, New Markets Tax Credits (NMTC), Energy Investment Tax Credits (ITC), and local grants or abatements.
We provide sophisticated structuring advice that addresses timing, basis adjustments, and compliance across programs. Our counsel ensures that projects satisfy the differing requirements of multiple incentive regimes without compromising QOZ qualification.
Coordinated Incentive Planning Services
- - Layering QOZ benefits with renewable energy and sustainability tax credits.
- Combining affordable housing and QOZ financing for community projects.
- Managing basis and depreciation implications for blended credit structures.
- Advising on tax-exempt bond financing and government subsidies.
- Aligning public policy objectives with investor and community outcomes.
Our integrated approach helps clients achieve both economic and social impact while maintaining compliance across overlapping regulatory frameworks.
6. Why Choose SJKP LLP for Qualified Opportunity Zone Counsel
Strategic Vision. Technical Precision. Community Impact.
Investing in Qualified Opportunity Zones requires more than tax knowledge—it demands multidisciplinary expertise and strategic foresight. At SJKP LLP, we bring together lawyers from across our practice areas to deliver holistic, actionable guidance that supports both investors and the communities they serve.
We represent fund sponsors, institutional investors, developers, family offices, financial institutions, and nonprofits nationwide. Whether forming a new QOF, structuring a development partnership, or combining multiple incentive programs, we provide the clarity, rigor, and creativity clients need to succeed.
At SJKP LLP, our mission is to help clients transform compliance-driven investment into lasting economic and social value—building stronger communities while achieving measurable financial performance.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading or relying on the contents of this article does not create an attorney-client relationship with our firm. For advice regarding your specific situation, please consult a qualified attorney licensed in your jurisdiction.
Certain informational content on this website may utilize technology-assisted drafting tools and is subject to attorney review.
