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Morris Manning & Martin, LLP

Treasury Issues Final Regulations on Opportunity Zones

12.23.2019

On Thursday, December 19, the Treasury Department released the final regulations with respect to the Opportunity Zone initiative. You can read the full 544 pages of final regulations here.

In the coming weeks, we will provide a detailed analysis of the final regulations. In the meantime, here are some notable highlights:

  • Investors no longer need to wait until the last day of the tax year to start the 180-day reinvestment period with respect to so-called “section 1231 gains”.
  • Investors with Schedule K-1 gains have another option to start the 180-day reinvestment period on the due date of the flow-through entity’s tax return (not including extensions).
  • The so-called “10-year exclusion benefit” is available for property sales at the QOZB-level.
  • Property that has been vacant for at least one year may qualify as “original use property” in the hands of a QOF or QOZB.
  • In determining whether the substantial improvement test is satisfied, an aggregate approach (rather than an asset-by-asset approach) may be utilized.
  • In certain situations, a 62-month working capital safe harbor may be available.
  • Triple-net-leasing property may constitute an active trade or business under certain circumstances.
  • Property for which capital covered by the working capital safe harbor is expended is deemed used in a trade or business and QOZBP during the safe harbor period.

To learn more about our Opportunity Zones practice group, click here or contact Matt Peurach directly.