Opportunities Don't Lead to Deals

Los Angeles Business Journal (March 18, 2019) A federal tax incentive aimed at boosting development in economically distressed communities is driving up phone call volume for many tax lawyers in Southern California. But one year into the program, lawyers say those calls haven’t exactly translated into a windfall for business. Known as “opportunity zones,” the much hyped program was part of the Tax Cuts and Jobs Act, which became law Dec. 22, 2017. It provides tax benefits to investors by allowing them to defer taxes on capital gains if they invest that money in opportunity zone funds. The program is far from simple. The tax benefits apply only to certain qualified funds, and there are several time windows to keep track of. That complexity is part of what’s kept potential investors from diving in — and hiring lawyers to handle the deals. Allen Matkins Leck Gamble Mallory & Natsis attorney Matthew Ertman said some clarification to the regulations is expected soon, and that could bring a bigger boon for the legal industry. “It certainly has generated a lot of discussion, a lot of phone calls, a lot of inquiries from clients and nonclients,” Ertman said. “People are still trying to figure it out and see if it is going to be worth the effort and cost.” Ertman said one potential client was hoping to start a fund but backed down when he learned that the benefits only apply to capital gains. Read more...