Fund offers investors a way to defer, discount, and eliminate federal capital gains taxe
Based on the U.S. Tax Cuts & Jobs Act of 2017, Badger State Opportunity Fund is Wisconsin’s first diversified, statewide Qualified Opportunity Fund. The fund offers investors a way to defer, discount, and eliminate federal capital gains taxes in exchange for making long-term investments to fuel economic development in federally designated Wisconsin communities.
The Fund seeks to raise $10-$25 million and generate returns of 8%-16%. The minimum investment is $25,000, which is at least 50% the minimum required by many national funds. Investments in the fund will be committed for at least a 10-year lockup period to maximize federal tax benefits for investors.
Federal Tax Benefits
Individuals, couples and entities investing in a Qualified Opportunity Fund are eligible to receive federal tax benefits:
- Deferral of existing federal gains tax liability payment for up to 7 years on assets sold and proceeds invested in the Opportunity Fund within the past 180 days
- Reduction of existing federal capital gains tax liability by up to 15%
- Elimination of future federal capital gains tax liability held at least 10 years
Investors may invest non-capital-gains-related monies, but will not receive the above-mentioned federal tax benefits.
Investment Strategy
Badger State Opportunity Fund seeks to make equity investments in business and commercial real estate based on the following:
- Long-term Appreciation– developments expected to generate growth in valuation and revenue of 8%-16%
Geographic and Asset Class Diversification…business purchases, expansions, startups as well as commercial real estate (e.g., new construction, substantial redevelopment, etc.) within Wisconsin’s 120 federally designated, taxadvantaged Opportunity Zones, located across 60 municipalities in 44 counties - Public & Private-Sector Support– those with financial support from both the public and private sectors as a way of mitigating risk and increasing the likelihood of the investment’s success
- Social Impact- that positively impact communities, such as creating and/or retaining jobs, meeting an unmet community need (e.g., healthcare, wellness, food, etc.), and/or improving sustainability
Investor Qualifications
Given U.S. Securities & Exchange Commission (SEC) regulations, Badger State Opportunity Fund is only permitted to accept investment from accredited investors—individuals, couples, and entities who meet one of the following:
- Is an individual with annual income of at least $200,000, or a couple with joint annual income of $300,000, for the last two years and expect to earn the same or higher income in the current year; or
- Is an individual, or couple, with a net worth exceeding $1 million, excluding the primary residence; or
- Is a qualified entity with assets in excess of $5 million
