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04/17/2019
Treasury Releases New Guidance on Opportunity Zones
Today, the U.S. Treasury Department released long-awaited guidance on opportunity zones. The release came amid a lengthy White House program that included secretaries from HUD and Treasury, as well as some practitioners working in opportunity zones around the country. This second round of proposed regulations promises to provide clarity for everyone that has been eagerly anticipating their release.
Here, we touch on a few of the issues addressed in the 169-page proposal:
Here, we touch on a few of the issues addressed in the 169-page proposal:
- 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.
Subject matter expertise
Beth Mullen
CPA, Partner, Affordable Housing Industry Leader
Brian Newman
CPA, Partner, Practice Leader, Federal Tax Services
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On-Demand Webinar: OZ - Perspectives on the New Wave of Guidelines & Key Considerations
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.