$20M Business Exit Defers $5M in Taxes with Advanced Real Estate and Opportunity Zone Strategy 

This example demonstrates how our Virtual Family Office approach canbring VFO Specialist Jay Frank and the team at Cantor Fitzgerald Asset Management together with a financial advisor, CPA, and attorney to execute a highly sophisticated, multi-layered exit strategy. By leveraging IRC Section 1031, IRC Section 721, and the Qualified Opportunity Zone Program, a $20M liquidity event may be transformed into a tax-efficient,income-producing, and estate-optimized solution. The result: minimal taxes, long-term growth, and enhanced wealth transfer—all without giving up control or flexibility.

Our Virtual Family Office Specialist, Jay Frank, along with the advisor and CPA, developed a coordinated multi-part strategy using Section 1031, Section 721, and Qualified Opportunity Zone (QOZ) planning:

1. 1031 Exchange

• Exchanged $12M in zero-basis factory real estate into institutional-quality DST multifamily properties
• Acquired non-recourse debt at the DST level, creating $12M of new depreciable basis
• Began receiving ~4.5% cash flow with significant tax efficiency due to depreciation
• Locked in tax deferral on ~$5M tax liability

2. 721 Exchange (UPREIT)

• After 2–3 years, DST interests are eligible to convert into REIT operating partnership units
• Achieved diversification, liquidity (quarterly), and partial tax-free redemptions over time
• Allowed for long-term income, estate planning flexibility, and continued tax deferral
• Strategy enabled eventual tax-free liquidity while avoiding capital gains and depreciation recapture

3. Capital Allocation

• Paid tax on $4M to retain liquidity (~$2M tax bill)
• Invested the remaining $4M of capital gains into two Qualified Opportunity Zone Funds

4. Opportunity Zone Benefits

• Will owe tax on initial $2M gain in 2027
• But all appreciation and income from OZ fund over 10+ years is expected to be 100% tax-free
• Additional depreciation recapture is expected to be completely excluded
• Assets placed inside an irrevocable grantor trust for enhanced estate planning flexibility

• Deferred nearly $5 million in immediate tax liability
• Converted highly concentrated real estate into diversified, quality holdings
• Established monthly and quarterly liquidity through REIT OP units
• Created multi-generational tax-free growth via QOZ Funds
• Optimized estate plan through the use of an irrevocable grantor trust structure
• Aligned capital deployment with long-term income, growth, and legacy goals
• Avoided the complexity of asset slicing or forced sales, thanks to DST and REIT liquidity options

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