Second round of Opportunity Zone regs provides more clarity

Q&A with Cheryl Vinall Denney

published in The Oklahoman | June 25, 2019

While the federal Opportunity Zone incentive program, which was created as part of the Tax Cuts and Jobs Act of 2017, generated significant excitement in investment and development circles when it was initially introduced in December 2017, many potential investors chose to wait it out on the sidelines until further guidance and clarity was provided on several key issues.

In a follow-up Q&A with The Oklahoman on the topic of Opportunity Zones, McAfee & Taft business attorney Cheryl Vinall Denney highlighted several long-awaited answers provided by the U.S. Department of Treasury in its second tranche of proposed regulations, which were released in April 2019.

“One of the most important areas was providing that the benefits of the Opportunity Zone inventive can be maintained even if the original Opportunity Zone investment is sold so long as the proceeds of the sale are redeployed into another Opportunity Zone investment within one year,” said Denney.  “The new regulations also provide a safe harbor to allow Opportunity Funds to distribute income to investors so long as the amount distributed does not exceed the investor’s basis in its Opportunity Fun investment.”

Until final regulations are issued, Denney said investors are protected in relying on these latest proposed regulations.