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IRS releases second tranche of proposed Opportunity Zone regulations

published in McAfee & Taft Business Alert | April 19, 2019

On April 17, 2019, the IRS released the second set of proposed regulations (REG-120186-18) which include guidance on a number of issues that the McAfee & Taft Economic Development, Tax Credits and Business Incentives attorneys have been tracking. These include:

  • Revisions and updates to the first set of regulations
  • Clarification of the definition of “substantially all” for purposes of holding period requirements and property use requirements
  • Guidance on sourcing an Opportunity Zone Business’s income
  • Transactions and other events that will cause deferred capital gains to be included in income
  • Guidance on how leased property is treated by a Qualified Opportunity Zone Business
  • Clarification on what constitutes Qualified Opportunity Zone Business Property
  • The meaning of “original use” and the treatment of land for “original use” purposes
  • Start-up capital invested in Qualified Opportunity Funds
  • How to treat a Profits Interest in Qualified Opportunity Fund partnerships

You can read all 169 pages of the proposed regulations here. Cheryl Vinall Denney, Bonner J. Gonzalez, and Ryan C. Anderson hosted a complimentary webinar after the initial set of proposed regulations. You can view it by clicking here. The webinar and materials have not been updated to reflect the newly issued proposed regulations, but they will be updated in the near future.

For more information about the Opportunity Zones tax incentive or other state and federal tax incentives, contact your McAfee & Taft Economic Development, Tax Credits and Business Incentives attorney or call Cheryl Denney at (405) 552-2295.