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By: Russell Stein, Partridge Snow & Hahn LLP
On Thursday, December 19th, the U.S. Department of Treasury released the long-awaited final Opportunity Zone Treasury Regulations. The Final Regulations and explanatory materials that span 544 pages, are quite extensive and give some needed clarity into how the Opportunity Zone tax rules work. This client alert is intended to highlight just some of the changes and clarifications in the rules.
As a brief refresher, the Tax Cuts and Jobs Act signed into law in 2017 created a tax incentive aimed at increasing economic development in low-income communities. Generally under the law, Opportunity Zones provide three potential tax savings opportunities for investors (assuming a timely election is made on their tax return and other eligibility requirements are met): 1) deferral of recognition of capital gain if such gain is invested in a Qualified Opportunity Fund (a QOF) within a specified 180-day period, 2) exclusion of up to 15 percent of the deferred gain from taxation (assuming an eligible investment in a QOF is made by December 31, 2019, and held for at least 7 years), and 3) exclusion from taxation on any appreciation in the QOF if the investment is held for at least 10 years prior to sale.
Treasury has issued two prior sets of proposed regulations. The Final Regulations consolidate these proposed regulations as well as change various parts to reflect comments received on the rules over the last two years. Among the chang...................... To view our full article Click here
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