By now investors have likely heard of Opportunity Zones, the economic development program offered through the Tax Cuts and Job Acts of 2017. But a large number of investors are unaware of the special flexibility afforded to those who have earned capital gains through a partnership. In fact, several of Cadre’s investors didn’t realize they had eligible capital gains to deploy until exploring this specific angle in more detail with us.

In October 2018, King & Spalding outlined this opportunity in a memo on the Proposed Regulations:

In the case of a partnership…the 180-day period begins on the last day of the partnership’s taxable year, as that is the day on which the partner would be required to recognize the capital gain if it were not deferred.1

In other words, the 180-day clock for redeployment still applies, but when the gain is generated through a partnership, there is more flexibility on when that 180-day period begins.

(Learn more in our Guide to Opportunity Zones.)

Consider the following hypothetical example:

Christine is invested in a private equity fund that sold a portfolio company and made a large distribution at the end of January 2018. That distribution is now classified as a capital gain on Christine’s Schedule K-1 from the private equity fund. Applying the standard 180-day rule, Christine’s 180-day window would have expired in July 2018. However, given the gain was generated through a partnership, she can choose to start her 180-day clock at the end of the partnership’s taxable year. This election would give Christine until June 29th, 2019 to re-invest her capital gain.

Investors who reinvest capital gains through a Qualified Opportunity Fund can capture significant tax benefits. Opportunity Zones offer the potential for capital gains tax breaks on any recently sold investment — including stocks, bonds, a private business, or real estate — so long as the gains are rolled into a Qualified Opportunity Fund within 180 days of the gains being realized.

To learn more about the ​Cadre Opportunity Zones Program​ or to view our current Opportunity Zone offerings, please ​request access​ to the Cadre platform.


Educational Communication

The views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein.

Not Advice

This communication is not to be construed as investment, tax, or legal advice in relation to the relevant subject matter; investors must seek their own legal or other professional advice.

Performance Not Guaranteed

Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance.

Risk of Loss

All securities involve a high degree of risk and may result in partial or total loss of your investment.

Liquidity Not Guaranteed

Investments offered by Cadre are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved.

Not a Public Exchange

The Cadre Secondary Market is NOT a stock exchange or public securities exchange, there is no guarantee of liquidity and no guarantee that the Cadre Secondary Market will continue to operate or remain available to investors.

Opportunity Zones Disclosure

Any discussion regarding “Opportunity Zones” ⁠— including the viability of recycling proceeds from a sale or buyout ⁠— is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidances, including, among other things, two sets of proposed regulations and the final regulations issued by the IRS and Treasury Department in December of 2019. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. We cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings, or court decisions will have and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.

Cadre makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Any actual transactions described herein are for illustrative purposes only and, unless otherwise stated in the presentation, are presented as of underwriting and may not be indicative of actual performance. Transactions presented may have been selected based on a number of factors such as asset type, geography, or transaction date, among others. Certain information presented or relied upon in this presentation may have been obtained from third-party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.