Dealerships located in “qualified opportunity zones” and fitting AACAP’s target profile can be especially attractive because they can be acquired through AACAP-sponsored “qualified opportunity funds” that can provide exceptional tax relief to investors who contribute eligible capital gains to the QOFs and then hold their QOF investments for at least ten years.
The QOZ program was created by Congress in the Tax Cuts and Jobs Act of 2017 to revitalize economically disadvantaged communities in the United States. QOZ tax incentives encourage long-term investment in over 8,700 designated underserved areas nationwide, leading to local economic development and job creation.
Under the QOZ program, investors roll over capital gains into Qualified Opportunity Funds that invest in businesses located in QOZs. Taxes on the capital gains investors would have paid if the funds had not been invested are deferred. If QOZ investments are held for ten years or more, the investor pays no tax on capital gains when their investment is liquidated.
For more information, visit Opportunity Zones Frequently Asked Questions on the IRS website.