In response to the ongoing COVID-19 pandemic, the IRS released Notice 2020-39 on June 4, 2020, in order to provide relief for Qualified Opportunity Funds (QOFs) and Qualified Opportunity Zone Businesses (QOZBs). Notice 2020-39 provides the following relief:
- If the last day of a taxpayer’s 180-day reinvestment period for reinvesting eligible gains into a QOF falls between April 1, 2020, and December 31, 2020, the last day is automatically postponed to December 31, 2020.
- If one of the 90% asset testing dates for a QOF falls within the period beginning on April 1, 2020, and ending on December 31, 2020, any failure by that QOF to satisfy the 90% asset test for that taxable year is automatically treated as (1) being due to reasonable cause and (2) disregarded for purposes of determining whether the QOF or any otherwise qualifying investments in that QOF satisfy applicable statutory and regulatory requirements.
- The 30-month substantial improvement period is tolled during the period beginning on April 1, 2020, and ending on December 31, 2020.
- All QOZBs holding working capital assets intended to be covered by the working capital safe harbor before December 31, 2020, receive up to an additional 24 months to utilize those working capital assets.
- If a QOF receives proceeds from the return of capital or the sale of some or all of its qualified property, and that QOF’s 12-month reinvestment period includes January 20, 2020, that QOF receives up to an additional 12 months to reinvest such proceeds in other qualified property.