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Applications for the Ohio Opportunity Zone Tax Credit are now live, and the Ohio Development Services Agency will review and award the applications on a first-come, first-served basis beginning January 2, 2020, at 10:00am EST and ending on January 31, 2020, at 5:00pm EST.

Successful applicants will receive a transferrable certificate for a non-refundable income tax credit equal to 10% of the amount invested into Ohio opportunity zones, whether with eligible gains or ordinary after-tax cash. The OZ Tax Credit is capped at $1 million per taxpayer, and up to $50 million for all taxpayers, during the 2020-2021 biennium period.

To be eligible for the OZ Tax Credit, a taxpayer must make a calendar year 2019 investment into an Ohio qualified opportunity fund (“Fund”) that holds 100% of its assets in one or more Ohio qualified opportunity zone businesses (“QOZB”) or qualified opportunity zone business property (“QOZBP”).

The application must include:

1. The taxpayer’s bank statement evidencing an investment into the Fund;
2. The Fund’s certification of the taxpayer’s investment (“Form A”); and
3. The QOZB’s certification of the Fund’s investment (“Form B”).

If the taxpayer invested into a Fund that made an investment into a QOZB, then the Fund would return a completed Form A to the taxpayer, and the QOZB would return a completed Form B to the taxpayer. If the Fund made a direct investment into a QOZBP, then the Fund would return completed copies of both Form A and Form B to the taxpayer. In either case, the taxpayer would use the information provided on Form A and Form B to complete its application for the OZ Tax Credit.

Under 26 U.S.C. Section 1400Z-2 and the proposed regulations thereunder (the "OZ Act"), Congress has authorized special federal income tax treatment for taxpayers who invest capital gains into Treasury-designated “opportunity zones”, including temporary deferral and partial reduction of the capital gains tax liability. On the tenth anniversary of the investment, it becomes eligible for a tax-free sale. Ohio’s OZ Tax Credit complements the federal OZ Act by providing a dollar-for-dollar credit against state income tax for calendar year 2019 investments into Ohio opportunity zones.

Kegler Brown Hill + Ritter advises taxpayer-investors, fund managers, developers, and entrepreneurs on tax-advantaged qualified opportunity zone transactions. For questions on the Ohio Opportunity Zone Tax Credit Application or other opportunity zone-related matters, please contact Andrew P. Doup at (614) 462-5488 or [email protected].