What are some of the most important tax accounting considerations when forming and managing an Opportunity Zone Fund?

Valerie Grunduski is a real estate tax accounting specialist and leads Plante Moran’s Opportunity Zones practice.

Click the play button below to listen to my conversation with Valerie.

Episode Highlights

• Tax considerations when creating a Qualified Opportunity Fund.
• Accounting firm services that fund managers should consider when forming and managing an Opportunity Zone fund.
• Mistakes that QOFs sometimes make in projecting IRRs in Opportunity Zones.
• The right and wrong way to structure debt, and the consequences of improperly structured debt.
• Why OZ funds that don’t require debt financing may want to consider it anyway.
• The importance of having a 31-month safe harbor business plan.
• How Section 1231 gains are treated in Opportunity Zone investing.
• Exit considerations for multi-asset funds.

Featured on This Episode

• Valerie Grunduski on LinkedIn
• Plante Moran
• Podcast episode #37: QOF Formation Legal Considerations with Jessica Millett
• Section 1231: The next big disruption for opportunity zones
• Recap of the July 9 IRS public hearing
• EIG Opportunity Zone Coalition’s public comment letter [PDF]

Industry Spotlight: Plante Moran

Headquartered in Detroit, Plane Moran is one of the nation’s largest certified public accounting and business advisory firms, providing audit, tax, consulting, and wealth management services. Among CPA firms, they are one of the tax accounting leaders in the Opportunity Zones space.

Learn more about Plante Moran

• Visit PlanteMoran.com

About the Opportunity Zones Podcast

Hosted by OpportunityDb.com founder Jimmy Atkinson, the Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

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Show Transcript

Jimmy: Welcome to the Opportunity Zones Podcast. I’m your host, Jimmy Atkinson. And today I’m joined by a real estate tax specialist at Plante Moran, one of the nation’s largest certified public accounting firms. Valerie Grunduski, thanks for taking the time to join me today and welcome to the podcast.

Valerie: Thanks for having me, Jimmy.

Jimmy: Yeah, great. Absolutely. So I know we’ve met a couple times at a couple of the different Opportunity Zone expos around the country, and it’s good to get you on the podcast finally. So thanks for being with us today. Now, I want our conversation today to center on fund creation. But before we get going, just wanna get this out of the way that I did have a podcast episode a few weeks back that focused on fund creation from a legal perspective. And my guest for that episode was Duval & Stachenfeld’s, Jessica Millett. That was episode number 37, which first aired on June 19th. But today, I want to attack the issue of fund creation and management best practices from a tax perspective. So Valerie, could you tell me really quick before we dive into the weeds here, what are some high-level considerations when creating a Qualified Opportunity Fund?

Valerie: Sure. And so in addition to making sure that you’re following the letter of the law and your agreements and whatnot are set up properly, you know, we’ve been working with some of our fund manager clients to focus on what are the actual tax implications going to be along the way and at the end of the deal? And so, you know, it’s thinking not just about how things need to be worded but what’s going to happen on those tax returns along the way.

Jimmy: And tell me a little bit more about what you do at Plante Moran, and who are your Opportunity Zone clients typically. You know, what are the size of the funds that they’re creating? What types of fund managers are they, or are they real estate developers primarily, and what services are you providing for them?

Valerie: Sure. So, you know, I’ve been at Plante Moran for it’s actually almost 15 years now, and I’ve spent my entire career largely, you know, in and out of the real estate industry, and some time, you know, in the wealth management space, as well. So it’s been nice on the frontend to be able to focus on where a lot of the early movers in Opportunity Zones have been, as well as understanding how it will affect the investors, as we talked about on the front here. So, you know, after the passage of Tax Cuts and Jobs Act, we pulled together an Opportunity Zone practice, which I now lead. And so in addition to being a technical specialist and being, you know, tasked with educating not only internally, but also our clients, our prospects, you know, and anyone in the marketplace who wants to learn more, I’m also involved in working with clients to structure transactions that they are trying to fund with Opportunity Zone equity.

And so you know, to answer your question, maybe it is a real estate developer that’s where I would say a lot of what we saw, at least up until the second tranche of regulations were released, you know, that was most of what we thought it was a lot of developers who had projects that maybe they were already contemplating, but wanted to learn how they could layer this incentive on top of what they were thinking of doing. But since then, it has expanded some and we’re working with fund managers who maybe aren’t the developers. And we’re also working with some folks who are trying to use this program with operating businesses as well, which has been, it’s been fun and interesting.

From a buyer’s perspective, they kind of run the gamut, right? We have some people who are trying to do just, you know, maybe one particular project or deal and we have others who’ve got a whole host of investments they’re looking to make, and are trying to determine if they want to use that multi-asset approach or, you know, do them all separately.

Jimmy: And so you mentioned that you do have some clients that are doing some Operating Business Funds now whereas, you know, before the second tranche came out, were primarily real estate and your background is in real estate tax. Has that been challenging for you to attack operating business funds? Tell me about that a little bit. And then, what has the trend been? Are you seeing more and more of them come through your practice?

Valerie: Right. And so like one of the nice things about our firm is that, you know, while maybe my history has been very tied to the real estate industry, we are a full service. You know, we kind of touch almost all industry groups. And so what’s nice about this program is that we have touch points on basically any step along the way. It could be the fund, it could be real estate, it could be operating businesses. And even going so far as to the municipalities and governments who are affected by that. So we kind of have this whole team that we can bring to it. And so while the operating businesses, you know, there’s a little bit more of a twist on how some of these rules apply, it actually hasn’t been too much of a stretch because you still start with the same basic principles. So if anything, it’s maybe you’ve made it a little bit more fun and interesting because it takes it outside of what, you know, the day-to-day has looked like historically.

Jimmy: Right and I think that’s where…

Valerie: … Oh, sorry. Go ahead.

Jimmy: I was just gonna say I think that’s where this marketplace is eventually gonna go. And I think we’re seeing that trend right now. We’re gonna see more and more operating business funds being created, and I think those are gonna be the drivers of the jobs and the social impact at the end of the day. The real estate is important and it’s necessary and it was the easiest thing to get going with out the door because we had the regs and there’s some muscle memory in the real estate industry for working with a tax programs such as this one. But yeah, I like the Operating Business Funds myself, and I hope to see more and more them come to light.

So if I’m a real estate developer or a fund manager and I want to put together a qualified Opportunity Fund and take it to the marketplace and start raising capital, what am I coming to you for? What services are you providing to me to help me get my fund off the ground and to be able to take it to the market?

Valerie: Sure. Yeah, so, you know, the way we look at what we do, we don’t do operating agreements. We can’t do some of those legal pieces. And so you still, you know, need to have an attorney who’s on board that we would love to work alongside of. So it’s looking at not just again, what does the letter of the law say? How exactly does it have to be, you know, be set up to meet the different parameters? But thinking that step forward. So, you know, a few of the things that we’ve been doing with clients, start with what we call these agreed upon procedures reports. And it might be thinking a little bit like a comfort letter, if you will, where we kind of go through the requirements of the post section and compare it to what your business plan is and then help you provide something that can show, okay, yes. If we follow along, you know, our plan, this will work in this program. We help our clients with the financial projection piece.

You know, some of our clients will come to us where they already have a set of projections. Others need us to start from scratch. But either way, what we intend to do there is layer on not just the potential investor benefit at the end but also understanding what the taxable income implications will look like along the way. And so that’s something that we’ve been doing for quite a few of our fund clients. And with that investor benefit, helping them understand what’s the differentiator for them. So what would the return on this investment look like if they weren’t using Opportunity Zone, and what does the after tax return look like for their investor, you know, that is utilizing the Opportunity Zone incentive?

You know, we’ve been doing some other things just from a consulting angle, looking at debt structuring and distributions how we pulled together a template for the 31-month tax safe harbor. You know, kind of helping them lay out what that business plan might need to look like to get that benefit.

Jimmy: Yes, you mentioned, layering on the tax benefits on top of your funds projections to take those to the to the marketplace to potential investors. What are you seeing funds doing wrong? Or maybe that’s a little harsh. What are you seeing funds missing out on in terms of doing that? Are they stopping short sometimes in terms of layering those tax benefits into their projections? And then what happens to those projections when the tax benefits are layered on top properly?

Valerie: Yeah, no, absolutely. So if we start with maybe just that entity, right, like the benefit, and what that looks like, you know, we’ve got a financial advisory arm of our firm as well. And so they’ve asked me to, you know, look at some of the best practices that have crossed their desks from different funds. And it’s been interesting to see that while they’re, you know, giving all sorts of information about what the IRR projects might look like, they do not attempt, at least from, you know, the majority of the ones we’ve seen, they do not attempt to layer on top of that, what the after-tax IRR would look like.

And I think some of that is maybe, you know, there’s some element of risk there and it’s a little bit hard to know how it will work for, you know, one investor versus the next. But with some of the clients we’ve been working with, once we dig into that a little bit deeper, we realize that they are able to show a potential investor group, you know, exactly why making this investment could make more sense, you know, with an Opportunity Zone benefit than without. We’ve heard on your podcasts and, you know, just in general not making an investment that you wouldn’t have otherwise made. But what is really nice about this is that we can show, okay, if you look at the same investment side-by-side with and without Opportunity Zones, you know, what that, you know, additional cash that you get to keep in your pocket by not paying taxes can look like.

And so one of the most recent ones that we looked at, you know, the after-tax IRR, ignoring Opportunity Zones came in around, let’s say, 8%, you know, again, it’s after tax, so assuming that you’re paying on your exit there. But once we layered in the Opportunity Zone benefits, that after-tax IRR was almost 12%, so, you know, almost 150% of what it would have been otherwise. So I think that can be real meaningful to, you know, the potential investors out there if you can show them, you know, why this might be worth the extra hassle.

Jimmy: Yeah, that’s a substantial difference that fund managers should be tripping over themselves to highlight to their potential investors. You mentioned a minute ago debt refinancing. And that’s one of the biggest remaining issues still that needs clarification in the final regulations. Can you tell me what happens if your debt is not structured properly? Maybe you can go through a traditional way that that debt is structured that maybe the wrong way and then if you could tell me what the right way to do it is, what are some of the differences there and what are the consequences of setting that up improperly?

Valerie: Sure. And so there’s, you know, two things where you know, debt comes into play, and one has to do with the debt finance distributions. And the other one has to do with how debt can play in just from an overall basis perspective. So, you know, I’m trying not to get too technical on you. You know, for tax purposes, when you make an Opportunity Zone investment and you’ve used deferred capital gain dollars, you start out with zero basis. And for tax purposes, if you have zero basis in an investment, and there are losses allocated to you, you don’t get the benefit of taking those losses on your tax return until you’ve done something to establish basis, which is either, you know, in this world, some of the stuff, you know, that happened along the way you’re paying your taxes on that initial gain, that would provide basis. But another alternative is if there is non-recourse debt inside of the fund that you receive an allocation of, that allows you to take some of these ordinary deductions that otherwise would be suspended on your return.

And why this is important and why we’ve been focusing on this with our clients is that, you know, we know that the back end of this program has some great, you know, potential upside in what you can do there. But on the front end, you’re defining a capital gain, which in most circumstances will be a gain that would have been taxed at a beneficial tax rate. You know, it’s not necessarily the highest tax rate depending on the type of capital gains. But if you do that, at the risk of giving up these ordinary deductions on the front end, which especially in the real estate world, you know, with depreciation and whatnot, you’re used to getting losses coming through from your investments, you know, you really have to start questioning like, “Well, is that worth it, right?” Because I’m deferring this lower rate income and in giving up these current, you know, higher rate deductions.

So what we’ve been trying to help our clients understand is how setting up that debt is important. And one thing that, you know, you and I talked about, the other day was maybe even considering layering in debt where you otherwise didn’t think that it was important to have. You know, if you have a recourse loan in one of these entities and somebody has to be on a guarantee it is only that partner who gets the benefit of the debt allocation and so therefore only that partner who would be able to take these losses in earlier. But if you instead were to set up that debt as being non-recourse, you know, it gets shared among the partners equally and everyone would get some of that benefit of doing so.

Jimmy: So two takeaways there. One, if I have a small development that I’m working on and I feel like I don’t even need to take on any debt, maybe it’s just a small $5 million or $10 million project, I have all equity that I can use to get that development going, I may actually wanna consider bringing on debt anyway because otherwise I’m unable to take any deductions along the way from day one. Is that what you’re saying? And then and then the second point is that projects funded by recourse debt is probably not the right way to do it. You instead wanna structure with non-recourse debt so then all the partners can take the deduction. Did I understand you correctly?

Valerie: Yes, you did. Absolutely. And part of this also goes back to why we think it’s important to really look at the tax impact of, you know, when you’re doing financial projections, you know, maybe someone has something that, you know, set up and showed the projected cash flows, but didn’t take it to the next piece to understand what the taxable income or loss allocations would be, and what would happen once that flows out to the investors. And so I think that’s where this kind of really plays in. But it’s not necessarily the right answer for every deal. I know some people will listen to this and think it’s insane that I’m suggesting you use debt where maybe you didn’t otherwise need to. But, you know, based on whatever the facts are of your particular taxable income flow over time, if you compare, you know, a rate that you might be able to get on a loan with, you know, giving up the tax benefits of those losses, you know, it might be pretty clear that that’s the right way to go.

Jimmy: Yeah, it might work out in some cases. I’ll put you on the spot here actually. Do you have a specific example you can cite with some real numbers?

Valerie: Yeah. Okay, so I think that where it makes sense, again, is where we’re talking about a project where you expect there to be large, ordinary losses on the front end. So again, you know, in the real estate world, we’ve got quite a bit of that with depreciation. I was talking to someone who was looking to do an energy project, a solar project, and those usually have very short, appreciable lives and they take bonus depreciation and whatnot on the front end. And then so the only reason they do these deals sometimes is for those huge losses that they would get in year one or year two or something like that. And so, you know, the solar client in particular was the one that I most recently talked to about how well, you know, really the only way to get that benefit and not have that stripped away from you is by layering debt on top.

I do wanna add just a quick caveat. It’s not that the benefit is stripped away, it’s just that it’s deferred. So in the same way that you’ve deferred, you know, paying tax on your capital gain, you’re now deferring the benefit that you would be otherwise getting from these losses. But it’s not that they disappear, it’s just that, you know, again, the time value of money.

Jimmy: Right, right. Understood. What are some other considerations, some tax considerations that developers and fund managers setting up a fund should keep in mind? I think, when we spoke on the phone earlier before we got on the podcast here, we discussed the 31-month test, and you’re currently putting together a template of what that can look like exactly, because I know there’s not really a lot of guidance and there’s no real standard template that exists out there yet. Can you talk to me a little bit about that?

Valerie: Right, exactly. And so, you know, with the way the regulations have come out, they’ve had some nice, you know, safe harbors and whatnot that have been built-in that are great to be able to take advantage of. And also, let me just real quick make a quick side note that a lot of these things we’re talking about, I am fully aware that someone could go ahead and structure their fund without doing these. Our point, I guess, for bringing these up, or just introducing the concept for our clients is one part to get your investor base comfortable with the fact that you’re actually going to be able to achieve what you’re setting out to achieve on the frontend, and that you’re following along with everything appropriately. But also just to kind of, you know, cover yourself from a safety perspective if you were to come under examination from the IRS.

So again, to your point, there’s nothing that currently says you have to, you know, exactly how you have to set up what that business plan looks like. But what we’re trying to do is provide something for our clients that is tangible, and so they can feel comfortable about, you know, being able to actually meet that test and have the documentation they need, if it were called upon. And again, it gives their investors confidence that they’re actually trying to structure their project in a way that will align with the proposed regulations. And so really is just kind of looking at what’s the overall project? How can you kind of show what your resources and uses will look like over time in a way that will meet that criteria?

Jimmy: Good. Yeah, a lot of it’s just about investor confidence. I mean, the IRS may never come calling to actually look at these documents. But well, first of all, if they do, you gotta make damn sure you have them. And then second of all, it is helpful to show the investor that you’re serious and you’re doing things the right way to stay in compliance. Absolutely.

Valerie: Yeah, yes, I wanna say there’s just two things on that point. The first one being about the investor. You know, we’ve noticed and especially just in talking to different financial advisors and whatnot, there is still a lot of hesitation. You know, we are going on, you know, a year-and-a-half year here into this program and we still only have, you know, proposed regulations, we don’t have any final guidance, and we still have a ton of questions. You know, you said in the latest hearing, and you heard how many questions there still are, and it makes the not just, you know, the investors themselves, but their advisors nervous to make these sort of commitments. And so anything that you as a fund manager can do to show that you are on top of it, that you understand the implications and how it will affect the investor and that you’re doing everything that you possibly can to make it work, you know, it can only help build up some of that confidence that’s necessary.

Jimmy: Absolutely. Yeah, I agree 100%. A few other points I wanted to hit upon with you. And actually, this was an issue that was brought up at the recent hearing a few times Section 1231 treatment. I know that you co-authored an article on the Plante Moran website about this. Can you give me kind of a high-level overview of what the issue is with Section 1231 gains and how you’re treating it for your clients?

Valerie: Sure. So, you know, on the frontend, we had a code section that referenced capital gains in the title and then just the gains generally within the body of the language, and there were all sorts of questions there.

Jimmy: Right. The statute, I think we can all agree was very poorly worded. Was it not?

Valerie: Oh, absolutely. I think it was only in the title that they used the word capital. But after that it kind of goes like a choose your own adventure.

Jimmy: Yeah, it was. It gave Treasury a lot of work to do.

Valerie: Exactly, which is probably why it’s taking as long as it is. But the first set of proposed regulations, you know, made everyone comfortable that yes, 1231 gains were intended to be included in the types of gains that could be deferred. And while we acknowledge that maybe the operating business side didn’t really pick up speed yet after the first set of proposed regulations, you know, we really were seeing a lot of activity on the real estate side. And so people were making investments knowing they’ve got okay 1231 gain, I will use that to defer and invest into an Opportunity Zone Fund. And then the second set of regulations came out. And those said, “Okay, well, you can still use 1231 gains, but the date that we will let you use to start your 180-day investment clock isn’t necessarily what you thought it would be. Now, it can only be the last day of the taxable year.”

Fortunately, they’ve, you know, released some guidance since then that says if you had you already made your investment prior to the second set of proposed regulations coming out that you were fine. You know, you didn’t have to worry about what you had already done, but it was changing what you could do going forward. So essentially, the problem here is that for a standard taxpayer, December 31, becomes the only date you can use as day 1 out of 180 if you have Section 1231 gains that you’re looking to defer, which I would say a lot of especially our clients in the real estate space that those are the type of gains they are looking to differ.

So in addition, you know, to other issues that that, you know, might cause it’s the fact that now you have frozen six months of the year. You know, six months leading up to December 31, that these investors won’t be able to make an Opportunity Zone investment during that time period and have that qualified. And so, you know, we don’t think that that was the intention or what makes sense. You know, there’s a number of different comment letters that had been put out, and we were quoted in one that the Economic Innovation Group Coalition included as well. And some of the suggestions to Treasury have been, “Okay, if you still wanna wait until the last day of the year to know for sure that you have the net Section 1231 gain, we understand that. But why not allow an investor to make an investment earlier in the year and then if once they get to the end of, you know, their tax year, they find out that it shouldn’t have qualified, well then you deal with it then. But you shouldn’t strip away that ability from an investor just because it’s possible that they won’t end up in a gain situation at the end of the year. So, you know, it’s something that was small and you understand why they did it, but it’s also clear they didn’t think through the consequences that that would have on those in the market who have those sorts of gains to invest.

Jimmy: Right. Yeah, and so one of the big outstanding issues still.

Valerie: Right.

Jimmy: Getting back to fund creation considerations now, we took a little detour and talked about 1231 there for a minute. But again, back to the fund creation perspective now from a tax perspective, are there any other considerations that we haven’t touched upon yet?

Valerie: I would say the one big one that I think we haven’t really talked about and it would also be the one that I would say that, you know, a lot of the funds haven’t necessarily been addressing is the exit. And this is probably some, you know, was a huge topic that you would have heard in the latest hearing as well, because right now, you know, with some limited carve outs that you can’t even rely on yet in the second set of proposed regulations, you know, the only way to get this exclusion after a 10-year hold, step-up in basis is by disposing of your interest in the fund, which has really made it challenging when you’re looking at a multi-asset fund and attempting to do it that way. Because essentially, what you need to be looking for someone who would purchase your entire, you know, partnership interest in all of the underlying assets. I mean, and it wouldn’t allow you to sell off those assets in order to get this benefit.

And so, you know, this is I think one of the pieces that has caused, at least a lot of our client base, to at this time still feel most comfortable having it’s one property one fund. But I think, you know, it’s definitely been an impediment to doing something on a grander scale. And it’s also I think, one of the things that’s been an impediment to make the financial advisory world feel comfortable having their clients make these investments. Because I can go ahead and show you in a projection what the tax benefit would be to the investor if everything happened perfectly, but if I can’t feel comfortable telling you that they will be able to make that exit successfully at the end, you know, then you’ll never see that. So I think that that’s why we’ve seen maybe an uptick in some of the funds that have been looking to set up as a REIT and, you know, considering, you know, becoming a public REIT at some point where you’d be able to sell your shares actively in the market, you know, and things like that that help kind of craft an exit strategy. But right now, I feel like personally, that’s one of the things that I’ve been most uncomfortable with setting up with our clients.

Jimmy: Yeah, and layering on a REIT restructure, correct me if I’m wrong, is not for the faint of heart. That’s mostly reserved for very large funds. Is that correct?

Valerie: Yes. I mean, because there’s a whole lot more to being a REIT and things that you have to do. You know, I’d be oversimplifying it in saying that that’s, you know, an alternative to help with the exit strategy.

Jimmy: Right. That was an issue that came up over and over and over again at the recent IRS public hearing was the treatment of multi-asset funds exiting options at different levels of the of the fund at the at the Qualified Opportunity Fund level, at the Qualified Opportunity Zone business level, and the Qualified Opportunity Zone property level. Each of those three different exit scenarios are treated differently, and there were calls by numerous speakers to synthesize those rules and in the goal of making it much easier for individuals and funds to exit efficiently.

Valerie: Right. Yeah, and, you know, you’re correct. You know, there’s multiple layers in the regulations in the code currently that treat, you know, slightly different investment structures completely differently. And so, you know, to the extent that we can kind of get things on the same page, we understand what the overall incentive here is and what they’re looking to accomplish. I mean, so it would be a real shame if somehow we got, like hung up in some, you know, technicalities that are seemingly minor, but they could have a huge impact, you know, from one deal to the next.

Jimmy: Yeah, that would be a shame. Hopefully, Treasury and IRS will get this worked out here in the next few months and we’ll get final regs that satisfy everybody, right, or hopefully, almost everybody. We’ll see what happens.

Valerie: Fingers crossed.

Jimmy: Exactly. Are there any other considerations for those who are setting up a Qualified Opportunity Fund or did we cover them all already, or covered the major ones?

Valerie: I think we’ve covered all the major ones. Yeah, so I was gonna say if things kind of, you know, continue moving and things get up and running and some of these actually, you know, projects are done and things are being placed in service, they will be other things to consider at that point, you know, as far as, you know, how can you feel confident that what you’ve done would qualify as a substantial improvement? You know, looking at other things that you could do to potentially accelerate deductions and things of that nature. So I think there still will be plenty of areas that we’ll dig into once these projects are really off the ground and running. But I think we hit on the big ones or the things to consider on the front end. You know, even if it’s a consideration of something that’s gonna happen on the exit, it’s still something that you wanna get nailed down or at least feel relatively comfortable about before you get started.

Jimmy: Good. And then fund management along the way. I mean, you know, putting the front-end aside, you know, management from day 2 onward through year 10, what are you advising your clients? Are there any high-level points of consideration there?

Valerie: Well, it’s interesting, because, you know, some of the players in this space would be ones who, you know, they already understand this, right? They maybe live in a fund management world and so there really isn’t much to talk about. You know, obviously, they need to make sure that these tests that need to be met throughout time are being met. But they at least kind of get the underlying concept of managing a fund. What’s been interesting is that because the fact that this program required a fund entity to be created, there are people who are moving into the space and having to have this fund management layer that they wouldn’t normally have incorporated into one of their deals. And so we definitely have some that we’ve been working with and even trying to determine what other services maybe internally we can provide to help them with that day-to-day and, you know, just understanding the communications with the investors and all of the other things that will be required to live in a space that maybe is outside of their comfort zone.

Jimmy: Yeah, that’s a good point. There was actually a speaker at the hearing. And forgive me that I’m referencing the hearing so much during our call today, but we’re actually recording this episode on July 11th and the hearing was just a couple days ago, so it’s very fresh and in our minds right now. But getting back to my point, there was a speaker at the hearing, James Rose representing Rose Development in Utah. And he is a real estate developer. He’s not a fund manager but he is now. And so he made the point that he’s had to become a fund manager just to take advantage of this incredible program. But he’s basically had to get a crash course in fund management and the IRS regulations and the statutory language have been complicated to understand for somebody who doesn’t have experience and expertise in tax law or tax accounting. So, yeah, that’s a good point you make. And I think there’s a lot of people like that out there who are similar to James who are, you know, smaller real estate developers, you know, not as large as the SkyBridges of the world who are trying to raise billions of dollars. But, you know, smaller real estate developers who may not have fund management experience who suddenly find themselves as fund managers now.

Valerie: Right. And your options are either to get educated quick, right, or hire people who can help you do it. So that’s unfortunately, you know, I guess what they have to…there’s no way to avoid it, I guess is what I’m saying, if they want to use this program there’s likely not a way to avoid it, so those are your options.

Jimmy: Yeah, no, I agree 100%. Well, Valerie, this has been great. I think we’ve come to the end of our conversation here. Unless there’s anything else, did I miss anything? Did we miss any points?

Valerie: No, I don’t think so. This has been great.

Jimmy: Good. Well, thanks for joining me today. Can you tell our listeners before we go where they can go to learn more about you and Plante Moran?

Valerie: Sure. So I’m pretty active on LinkedIn. So Valerie Grunduski on LinkedIn is where you can find me there. But also for Plante Moran, we have a site where we kind of update any of our, you know, podcasts, video conferences, and articles that we do and that is at plantemoran.com/opportunityzone. Nice and easy.

Jimmy: Excellent. Yeah, that is easy. So for our listeners out there, I’ll have show notes for this episode on the opportunity zones database website at opportunitydb.com/podcast. And you’ll find links to all of the resources that Valerie and I discussed on today’s show. I’ll have a link to Valerie’s LinkedIn account where she is active, and I’ll have a link to the Plante Moran’s opportunity zone center where they post a lot of their Opportunity Zone-specific content. Valerie, thanks again. This has been great. I appreciate your time today. Thanks for joining us.

Valerie: Perfect. Thank you.