A new opportunity zone fund known by the acronym GRASS™ (Growth Resources, Assets, Safety, & Stability) is now open to investors. GRASS™ is a Regulation A+ offering, also known as a “mini-IPO,” which allows small companies to sell shares publicly by exempting them from many of the usual registration requirements. Regulation A+ makes it possible for interested parties at any income or experience level to become investors.
GRASS™ focuses on two industries: compliance and aviation. Their compliance investment is in Sierra Software Systems, a SaaS provider with blockchain-based software for highly regulated government and business sectors. Their aviation investment is in SAMSARG, Inc. and GA Hangars. SAMSARG works in the government sector and provides high-tech hangar facilities for transport and cargo aircraft. GA Hangars works in the private sector and offers new construction of advanced aircraft hangars. The minimum investment required for GA Hangars is $1,000.
What is the Benefit to Invest in an Opportunity Zone Fund?
GRASS™ may be appealing to investors both as a qualified opportunity zone fund (QOF) and as a source of qualified small business stock (QSBS).
According to the IRS, a qualified opportunity zone is “an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” Importantly, a QOF makes it possible to transfer, defer, or eliminate capital gains taxes.
QOF Investors do not have to live, work, or have an existing business in the actual opportunity zone. As long as they invest the required amount and see a recognized gain (selling the shares for more than they originally paid), investors can typically take advantage of the tax benefits.
Opportunity Zones and Qualified Small Business Stocks
Qualified small business stock provides similar benefits to taxpayers, since QSBS is eligible for an exclusion of up to 100% of capital gains taxes. To receive the exemption, the company issuing stock must meet IRS guidelines for a qualified small business based on their industry type, size, business focus, and the dedication of its resources to its stated business purpose. The stock must also meet certain qualifications based on how it was acquired and how long it has been held.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.