OZ Tax Talk: Individual US Taxpayers’ Adoption of Opportunity Zone Program
(Spoiler Alert - approx. 37,000 US individual taxpayers and $39 billion accumulated OZ Rollover Capital Gains as of TY2022)
The Internal Revenue Service published data for individual US taxpayer participation in the OZ Program from 2019-2022 as part of comprehensive annual reports that track all individual income tax forms. We discovered the essential data that track the number of OZ Program filers and estimated amounts of OZ Rollover Capital Gains (deferred short-term and long-capital gain amounts reinvested into OZ Qualified Opportunity Funds).
This is core data for tax and economic development policy-makers to track private capital flows into OZ-designated low-income communities in reaction to actionable tax-based, incentive-based, economic reinvestment strategies, mandating the creation of specific entities, embedded in the Internal Revenue Code. This IRS data are limited to US individual taxpayers, thereby excluding the reporting of OZ Rollover Capital Gain among REITs, corporations, trusts, and pass-through entities.
Selective Conclusions
· All realized capital gains among US taxpayers trigger a live 180-day option to realize tax-free capital gains in the future. The magnitude of US comprehensive annual net capital gains among US individual taxpayers is exceeding $1 trillion since 2020. (The IRS is unable to segregate gross capital gains and gross capital losses.)
· OZ Program participation is approximately 37,000 individual US taxpayers as of TY2022 as compared to more than 26 million individual US taxpayers who file income tax returns bearing capital gain disclosures.
· The accumulated OZ Rollover Capital Gain is nearly $39 billion among individual US taxpayers as of TY2022. This amount of deferred capital gains, plus incremental deferred capital gain yet to be recorded and disclosed for TY2023-26, represent the significant input to compute the tax payment settlement between OZ Program individual US taxpayers and the US Treasury in the preparation of TY2026 income tax returns.
Yes, the OZ Program is gaining traction during its initial 10-year trial period. The OZ Program faced initial adoption headwinds while the US Treasury hammered out new OZ tax regulations from enactment in December 2017 to January 2020. Other sanctioned tax-advantaged strategies, with investment vehicle mandates, enacted in the IRC (i.e. investment companies in 1940, real estate investment trusts in 1960, business development companies in 1980) were incubating for several decades before significant adoption by private capital markets. We expect material increase in OZ Program adoption with its permanent enactment in The One Big Beautiful Bill (July 2025).
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OZ Tax Talk
The Entry Ticket to the Opportunity Zone Program
The Opportunity Zone Capital Market Program was enacted as IRC Section 1400Z as part of the Tax Cuts and Jobs Act of 2017, with an investment start date of January 1, 2017 and end date of December 31, 2026. Essentially a 10-year trial program to incentivize US taxpayers to redeploy some built-up capital gains into the economies of selected census tracts that featured a high proportion of low-income households. The Program’s success was validated by permanent extension, without sunset, as enacted in The One Big Beautiful Bill in July 2025.
The entry ticket into the initial 10-year OZ Capital Markets Program is comprised of the following procedural sequence:
· The realization of short-term and/or long-term capital gains across your comprehensive wealth portfolio, sourced from any capital asset in sale and exchange transactions with non-related parties;
· Organize a Qualified Opportunity Fund (QOF) or select from existing QOFs open for capital contributions;
· Cherry-pick your capital gain transactions, ignore capital loss transactions; to assemble periodic QOF capital contribution bundles, generally subject to QOF minimum investment amounts;
· Assemble cash from any source, including debt, to fund the QOF capital contribution bundles,
· Complete the execution of the Rollover Capital Gain within 180 days of each selected capital gain transaction date (some exceptions apply for longer Rollover Capital Gain execution periods).
· Recognize all deferred capital gains into taxable gross income in tax year 2026, and settle your deferred tax liability with the US Treasury.
This sequence is describing the initial OZ Program tax benefit that applies to all QOF investors through tax year 2026. This is not the tax-free capital gain benefit that is frequently headlined with the QZ Program. This tax benefit is defer now, settle later, the federal taxes on the realized capital gain included in OZ Rollover Capital Gains. Essentially, an interest-free loan from the US Treasury in the amount of the estimated capital gains tax liability with a maturity date of December 31, 2026 and payable in 2027. No opt-out of this interest-free loan arrangement if you want to capture additional OZ Program long-haul tax benefits.
Got capital gains? Talk to us at thepearl.fund
OZ Tax Talk
Daily Investment Exercise: The Rolling 180-Days Rollover Capital Gain Report
The rocket fuel for the Opportunity Zone Program is Rollover Capital Gain. Refresher: Rollover Capital Gain means realized short- and long-term capital gain, resulting from a sale/exchange of a capital asset, that is eligible for deferral of Federal income taxation under IRC Section 1400Z-2 by reinvesting realized capital gain amounts into Qualified Opportunity Funds (QOF) within a specific time period (generally 180 days, subject to various Day 1 marking options). OZ rocket fuel sets your multi-generational wealth portfolio on a flight path to maximize after-tax returns from portfolios of private equity investments that are tethered to Qualified Opportunity Zones.
You have a diversified wealth portfolio, that may include…
· self-directed management and multiple investment managers,
· passive and active investment strategies,
· marketable securities, bitcoin, venture capital/private equity funds, mutual funds/ETFs, business investments, real estate/real estate investment trusts, commodities, options and
· tax-pass through investment vehicles such as partnerships, limited liability companies, S-corporations.
Does your wealth management dashboard generate a daily OZ rocket fuel report including:
· mapping all of your investments to Schedule D Capital Gains and Losses
· Rocket Fuel Reserves: 180-days and 150-days look back of all known realized capital gain transactions across all holdings
· Surveillance of Section 19a notices from US regulated investment companies
· Form 1099-DIV from REITs and RICs
· Schedule K-1s, and tracking and surveillance of missing Schedule K-1s
· Surveillance of public and private funds’ quarterly financial statements and reports regarding the sale and pending sale of capital assets
· Marginal tax rates associated with each capital gain transaction?
Today, all US taxpayers who are recording capital gain on their income tax returns hold the daily option to create and invest in a pathway to realize tax-free capital gain over the next 22 years, to December 31, 2047. The OZ rocket fuel reserve changes every day with a rolling 180-days capital gains claw back for reinvestment into QOFs. If you pause your analysis until income tax return preparation time periods, then you may be holding worthless expired options to otherwise bulk up your wealth portfolio with long-term tax-free capital gains. And you can execute a Rollover Capital Gain investment into QOFs well in advance of receiving tax forms if you have reliable capital gain estimates. Why wait?
Let’s do our daily OZ investment exercise. How much OZ rocket fuel reserves have you accumulated between May 12, 2025 and today (180-day claw back) and between June 11, 2025 and today (150-day claw back)?
Looking for OZ Program guidance? Contact us at thepearl.fund.
@BrianPPhillips
Paul Saint-Pierre retweeted
The beautiful thing about the Opportunity Zone program:
It's not a handout. It's smart policy.
Investors get tax benefits for putting capital to work in areas that need it.
Local communities get the jobs and economic activity.
That's how you build generational wealth responsibly.
Paul Saint-Pierre retweeted
The benefits are simple: defer taxes until 2026, optimize your estate plan, and eliminate capital gains after 10 years.
Your returns track Bitcoin performance minus our operating costs and fees.
No magic. Just federal tax code applied correctly to Bitcoin.
Paul Saint-Pierre retweeted
Most wealthy Bitcoin holders think: "How do I keep more of my gains?"
I think: "How do we use these gains to rebuild communities?"
Our fund does both.
I've seen this model work internationally. Now it's working here.
The Opportunity Zone program was designed to drive capital into forgotten communities.
We're doing exactly that, using Bitcoin as the vehicle.
Your Bitcoin grows tax-free. Communities get jobs and investment.
Paul Saint-Pierre retweeted
Here's how the tax-free Bitcoin investment works:
• Invest recent capital gains within 180 days into our Opportunity Zone fund
• Hold for 10 years = zero capital gains tax on ALL appreciation
• We buy Bitcoin and hold it in institutional custody
No matter how much Bitcoin grows.
You keep 100% of the gains.
