Treasury Releases New Guidance on Opportunity Zones
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
CPA, Partner, Affordable Housing Industry Leader
CPA, Partner, Practice Leader, Federal Tax Services
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On-Demand Webinar: OZ - Perspectives on the New Wave of Guidelines & Key Considerations
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