IRS Releases Opportunity Zone Guidance

On October 19, 2018, the IRS released proposed regulations (REG-115420-18) concerning opportunity zones (sections 1400Z-1 and 1400Z-2). Opportunity zones were created by the Tax Cuts and Jobs Act and allow tax benefits for investments in low-income communities, through what are termed qualified opportunity funds. Among other items, the proposed regulations provide taxpayers with guidance on what kinds of taxable gains can be deferred by investors, the timeframe for investing in qualified opportunity funds, and the manner in which investors may elect to defer specified gains. The IRS also released Rev. Rul. 2018-29, which addresses the “original use” and “substantial improvement” requirements for property to qualify under the opportunity zone provisions. The Treasury Department has stated that additional opportunity zone guidance will be released before the end of this year that will focus on the operations of qualified opportunity funds.

Read More: IRS Unveils Proposed Rules for Tax Law’s Big Capital Gains Break

Read the Proposed Regulations: REG-115420-18

Read the Revenue Ruling: Rev. Rul. 2018-29

Back to top