PERMANENT Opportunity Zones — OZ 2.0
LLCs are standard vehicles. Qualified Opportunity Funds can be organized as partnerships or corporations — including LLCs taxed as either. Cloud Fronts LLC can form or invest in a QOF.
Quick Facts
| Field | Value |
|---|
| Original Authority | Tax Cuts and Jobs Act of 2017 (OZ 1.0) |
| Permanent Extension | OZ 2.0 — enacted July 4, 2025 |
| Designated Zones | 8,764 across all 50 states, D.C., and territories |
| LLC Eligible? | YES |
Tax Incentives
| Benefit | OZ 1.0 (Original) | OZ 2.0 (Permanent) |
|---|
| Capital Gains Deferral |
Defer prior gains invested in a QOF until sale or Dec 31, 2026 |
Same deferral mechanism, now permanent |
| Step-Up in Basis |
10–15% basis increase if held 5–7 years (investment by Dec 2021) |
Enhanced step-up provisions |
| Long-Term Gains Exclusion |
Eliminate gains on QOF appreciation if held 10+ years |
Same exclusion, enhanced for rural areas |
How It Works for an LLC
- Organize or invest in a Qualified Opportunity Fund (QOF) — an LLC or partnership that self-certifies as a QOF by filing IRS Form 8996
- Invest capital gains within 180 days of realization into the QOF
- QOF invests in Qualified OZ Property — must hold 90% of assets in OZ property (equipment, buildings, businesses)
- Hold for 10+ years to eliminate gains on appreciation
QOF Requirements
- Must hold at least 90% of total assets in Qualified OZ Property
- Measured on average at: last day of first 6-month period AND last day of tax year
- Can invest in: equipment, buildings, property, and operating businesses within zones
- Self-certifies by filing IRS Form 8996 with annual tax return
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