Treasury and IRS Designate Qualified Opportunity Zones (TDNR SM-0341)

The Treasury and the IRS have designated Qualified Opportunity Zones in 15 states and three territories. Private investments in these specific Qualified Opportunity Zones get preferential tax treatment under the Tax Cuts and Jobs Act of 2017 (P.L. 115-97).

Background

Under the new law, states, territories and possessions can nominate low-income communities as designated Qualified Opportunity Zones (QOZs). Also, the QOZs are eligible for special tax benefits. The states, territories and possessions needed to nominate zones by March 21, 2018, or request a thirty-day extension. Then, the Treasury had thirty days to designate the nominated zone. QOZs retain their designation for ten years.

Qualified Opportunity Zones

Investors who invest in a Qualified Opportunity Fund (QOF) can defer tax on prior gains until December 31, 2026. A QOF is an investment vehicle organized to invest in QOZs. In addition, the investor’s basis increases to the fair market value of investment on the date it is sold after holding a QOF investment for at least ten years.

The IRS has approved QOZ nominations from the following states:

  • Arizona,
  • California,
  • Colorado,
  • Georgia,
  • Idaho,
  • Kentucky,
  • Michigan,
  • Mississippi,
  • Nebraska,
  • New Jersey,
  • Oklahoma,
  • South Carolina,
  • South Dakota,
  • Vermont, and
  • Wisconsin.

In addition, the IRS has also approved QOZs in the following territories:

  • American Samoa,
  • Puerto Rico and
  • the U.S. Virgin Islands.

The Treasury and the IRS also plan to issue additional information on Qualified Opportunity Funds.

Find the list of approved opportunity zones here.

Treasury Department News Release, TDNR SM-0341

Opportunity Zones Frequently Asked Questions, Updated on April 9, 2018

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CCHTaxGroup

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