Research Paper $1$

Background: When working in the tax department of a public accounting firm it is common to have to do tax research. The AICPA has guidelines as to how to communicate the results of tax research, which generally involve identifying the following:

Facts

Issue$($s$)$

Discussion

Conclusion

The discussion will involve the use and application of primary tax authorities, such as the Internal Revenue Code, Treasury Regulations, IRS administrative guidance, and court holdings. Your memo should be organized into the four sections shown above and should cite ONLY primary tax authorities.

You have a client who recognized a $$3,364,110$ gain in June $2023.$ This came from the sale of a building for $$4,843,000.$ The building had a tax basis of $$1,478,890.$ The client received a check for $$4,843,000$ at the closing of the building sale. The client has heard that it may be possible to defer the gain by investing in an opportunity zone.

This client has identified a fund that is reported to be a qualified opportunity fund $($QOF$).$ The sponsor of this fund is accepting investments.

The client has two questions: How much of the $$4,843,000$ must he invest to avoid reporting any gain from the building sale? What if he does not invest the full sales price? Is it still possible to avoid reporting some gain? What happens to any gain that is not reported in $2023?$Are there any other advantages of investing in a QOF?

In any case, you will need to explain to the client how he should structure the planned investment.