Here are a few of the areas impacted by the final regulations.
On December 19, 2019, the Internal Revenue Service released the final regulations for investments into Qualified Opportunity Zones (QOZ) and Qualified Opportunity Zone Funds (QOF). Here are a few high-level areas impacted by the final regulations:
- Section 1231 gain netting reversed; gross Section 1231 gains can be invested within 180 days of recognition
- Installment sale gain investment into a QOF added
- Cure period for QOF to avoid penalty when Qualified Opportunity Zone Business (QOZB) fails to meet requirements
- Vacant property changed from 5 years to 3 years (1 year if already vacant at time of designation as QOZ)
- Brownfield sites are original use
- Self-constructed property is QOZB Property
- Substantial improvement can be aggregated vs. on an asset-by-asset basis
- Sale of assets by QOZB afforded same “step-up” that was allowed by QOF
- Assets qualifying for “step-up” at sale (if held for 10 years) by QOF/QOZB clarified
- Start-up businesses allowed an expanded working capital safe harbor to 62 months
- Working capital safe harbor is further clarified
- Rules around “sin” businesses are clarified
- Additional flexibility around gains recognized in pass-through entities
- Clarification of the leased property rules including related party rules
- Consolidated Corporation rules clarified and more flexible
- Anti-abuse rules clarified some
View the full text of the regulations.
What’s next
The CLA Opportunity Zone team is currently reviewing the regulations and will be providing a comprehensive analysis of the significant developments the rules provide. Watch our Opportunity Zone Resource Center for details.
How we can help
We can help you make clear decisions and realize the full benefits of the Opportunity Zone program. Our business tax planning professionals and wealth advisors are immersed in the real estate field, the investment market, tax reform, and the industries our clients operate businesses in. Whatever road leads you to Opportunity Zones, CLA is right there with you.