Moving Onward with the Opportunity Zone Program

Use our Interactive Opportunity Zone Map to evaluate opportunities and perform site selection in Qualified Opportunity Zones.

This is the latest addition to our library of Qualified Opportunity Zone Maps.

This map – (click here)      shows the Qualified Opportunity Zones which touch Metropolitan Statistical Areas (MSAs) having a population of over 500,000 people.

A new program to encourage investment in low income community businesses was included in the Tax Cuts and Jobs Act,1 signed into law on December 22, 2017.

Generally, new §1400Z-22 allows individual and corporate taxpayers to defer paying tax on gains from the sale of stock, business assets, or any other property by investing the proceeds into a ‘‘qualified opportunity fund’’ (O Fund),3 which in turn must invest at least 90% of its assets, directly or indirectly, in businesses located in certain low-income communities designated as ‘‘qualified opportunity zones’’ (O Zone).4

Partial forgiveness of tax on deferred gains and on future appreciation is possible for O Fund investments held for five, seven, and 10 years.

A detailed description of the benefits and requirements of the O Zone program is contained in an article by the author published in the Bloomberg Tax Real Estate Journal, 34 Real Est. J. 23 (Feb. 7, 2018).

The O Zone program was not self-executing. Instead, three things were needed to enable taxpayers to

OpportunityZoneProgram By Steven F. Mount, Esq.*
A new program to encourage investment in lowincome community businesses was included in the Tax Cuts and Jobs Act,1 signed into law on December 22, 2017. Generally, new §1400Z-22 allows individual and corporate taxpayers to defer paying tax on gains from the sale of stock, business assets, or any other property by investing the proceeds into a ‘‘qualified opportunity fund’’ (O Fund),3 which in turn must invest at least 90% of its assets, directly or indirectly, in businesses located in certain low-income communities designated as ‘‘qualified opportunity zones’’ (O Zone).4 Partial forgiveness of tax on deferred gains and on future appreciation is possible for O Fund investments held for five, seven, and 10 years. A detailed description of the benefits and requirements of the O Zone program is contained in an article by the author published in the Bloomberg Tax Real Estate Journal, 34 Real Est. J. 23 (Feb. 7, 2018).

The O Zone program was not self-executing. Instead, three things were needed to enable taxpayers to reasonably take advantage of the program:

(1) each state (and the District of Columbia and certain territories) were required to nominate O Zones within their jurisdictions pursuant to rules in §1400Z-1, which nominations had to be certified by the Treasury Department;

(2) rules on how to certify an O Fund were needed; and

(3) guidance from the IRS concerning compliance with several of the basic requirements of the statute was required. The first two have now occurred, but the timing of guidance from the IRS is unknown.

This article explores, in Q&A format, several practical questions that have been raised by potential investors and project owners that must be resolved for taxpayers to take full advantage of the program and speculates on guidance that may be forthcoming.

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