Treasury Releases New Guidance on Opportunity Zones

• Extensive discussion around how to make it easier to do multi-asset and multi-investor funds
• Additional leeway to invest capital on a more flexible timeline
• Three safe harbors and a facts and circumstances catchall that provides flexibility in meeting the 50 percent gross income test 
• Specific definitions related to “substantially all” provisions not previously covered
• Details and clarification on the working capital safe harbor
• How to treat leased assets versus owned assets
• How a fund might qualify assets that straddle the OZ geography
• Original use definitional flexibility based on meeting a five-year vacancy rule
• Limitations on OZ tax benefits pursuant to carried interest
• One-year grace period to sell assets and reinvest the proceeds, thus avoiding penalties intended to prevent funds from sitting on cash
• Investors who’ve held their stake in a fund for at least 10 years – even if the fund didn’t own the asset for a full decade – will qualify for special tax treatment

For a comprehensive, in-depth analysis of the proposed regulations, look for our April 24th Tax Alert newsletter and watch our on-demand webinar.

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