--Q&A in-process--
A1. California does not conform to Federal QOZ rules and ST Funds will not offer any capital gain benefits on the State level. The decision was made to look strictly at California property in spite of this apparent drawback because: the weaker argument for investing in California QOZ’s should reduce competition for better properties, ST’s owner-operator is a lifelong (outside of college) Californian who is very comfortable with California commercial real estate and all things California (for better or worse), and the logical pool of investors available to ST will be California residents who cannot – barring some loophole unknown to ST -- escape the California capital gains tax treatment by investing in another State that conforms to Federal QOZ rules (as almost all do). So essentially, these are California funds for California investors.
A2. Up to the amount of investment made in the fund realized within the applicable time period preceding the investment (e.g., $1 million capital gains realized in the 180-day period preceding the date of investment can be fully deferred by an investment of at least $1 million).
A3. “Forgiveness” of gain here and in item (5) is shorthand for what is actually an increase, or “step up”, in the investor’s basis in the investment, which has the same net effect.
A4. Though not a QOF qualification requirement, in order to align with the QOZ 2.0 tax benefits, the Fund will have a minimum term of 10 years from the contribution date of the last investment into the Fund, and investors will have no guaranteed redemption or buy-out. Securities law restrictions will also apply to Fund investments.
A5.
A6. Naturally, ST intends to generate compensation and wealth for itself from these Funds. To be frank and transparent, ST’s owner-operator considered QOZ 2.0 as an opportunity (no pun intended) that looked better and better as he looked into it more and more. He sees it as a way to leverage his experience and skills built up over decades into a viable investment vehicle from which he could receive industry-standard sponsor and management fees and perhaps also receive an investment share.
A7. Unfortunately, no. If it had funds to invest, it would.
A8.