An Opportunity Zone is an economically-distressed community where private capital investments, under certain conditions, are eligible for capital gain tax incentives. Opportunity Zones were created under the 2017 Tax Cuts and Jobs Act. There are 427 designated U.S. census tracts in Florida in which Qualified Opportunity Funds must invest. There are 12 U.S. census tracts in Orlando designated as Opportunity Zones. Census Tract 124.02 of Rosemont is one of the designated Opportunity Zones in Orlando.
The Owner is a Qualified Opportunity Zone Business further referred to as “QOZB”. One of the main shareholders of the Owner, Lake Orlando Land Holding, LLC, is a Qualified Opportunity Zone Fund further referred to as “QOZF”. In order to capture the full benefit of Opportunity Zones, an Opportunity Zone investor has to erect a structure within 55 months from acquiring a real property and stay invested for at least 10 years. The Owner is therefore extremely incentivized to fuel long-term development of Rosemont (rather than just obtaining a short-term gain) and will have to oversee the entire project from start to finish over a 10-year period. The Owner is extremely interested in building a long-lasting, mutually beneficial relationship with the Rosemont community.
In general, the term “qualified opportunity zone business” means a trade or business in which substantially all of the tangible property owned or leased by the taxpayer is qualified opportunity zone business property. In particular, note subsection (b)(3)(A)(iii) per the code states that the trade or business of a qualified opportunity zone business must not be described in Section 144(c)(6)(B) of the code. No proceeds invested within Opportunity Zones are to be used to provide (including the provision of land for) any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises. Therefore the Owner is not allowed to attempt to operate a golf course or any other uses listed hereof while obtaining any Opportunity Zone benefits.
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