Treasury recently released Proposed Regulations and a Revenue Ruling which provide guidance related to investments in Qualified Opportunity Zones (QOZ) and Qualified Opportunity Funds (QOF).

Taxpayers who invest in QOZ’s via QOF’s are eligible to receive significant income tax advantages. Depending on the taxpayer’s holding periods the provisions potentially allow for:

  • Deferral of the gain till 12/31/2026
  • Reduction in a portion of taxable gain on the property sold
  • Exclusion from taxable gain on the appreciation attributable to the replacement property

The guidance addresses:

  • Types of gains that qualify for deferral
  • Time frames to invest in a QOF
  • Manner of electing deferral Self-Certification of QOFs
  • Valuation of QOF assets
  • QOZ businesses
  • What is “original use”
  • What is “substantial improvement”

 

WilkinGuttenplan

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