Update: On November 15, the Internal Revenue Service (IRS) announced an upcoming series of webinars outlining the basics of the Tax Cuts and Jobs Act (P.L. 115-97). The series will feature three sessions, which will each focus on a specific topic including opportunity zones, the Qualified Business Income Deduction (199A) and due diligence requirements. All webinar participants who qualify will receive a Certificate of Completion, while tax professionals will earn 1 CE Credit. Registration links can be found below, and information on future IRS tax reform webinars can be found at this link.
Thursday, November 29, 2:00pm ET: Tax Reform Basics About Opportunities Zones
Thursday, December 6, 2:00pm ET: Tax Reform Basics for the Qualified Business Income Deduction (199A)
Thursday, December 13, 2:00pm ET: Tax Reform Due Diligence Requirements
On October 19, the U.S. Department of Treasury and the Internal Revenue Service (IRS) released proposed regulations and guidance on investment in Opportunity Zones, a newly enacted federal program that aims to spur investment in economically disadvantaged Census tracts. The regulations will help investors and local governments determine the types of development eligible for Opportunity Zone investments and will provide more details about the tax benefits for investors. The agencies are seeking comments on the proposed regulations, and counties are encouraged to submit their comments by the deadline of December 14 by clicking here.
In December 2017, President Trump signed into law the Tax Cuts and Jobs Act (P.L. 115-97), which authorized the designation of Opportunity Zones to spur investment in distressed communities throughout the U.S. by offering tax incentives for investments in those areas. Each governor nominated local areas within their state for these designations, and the U.S. Treasury reviewed these areas and designated a total of 8,761 zones. All 50 states, the District of Columbia and five U.S. territories have designated opportunity zones, which will retain that designation for the next decade. The complete list of designated Opportunity Zones is available at Opportunity Zones Resources.
Opportunity Zone investors will benefit from tax deferment on capital gains invested in a Qualified Opportunity Fund (QOF) until December 31, 2026. If the QOF investment is held for at least five years, there is a ten percent exclusion of the deferred gain. If held for more than seven years, the tax deferment increases to 15 percent. If an investor maintains the investment in the QOF for more than ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
If your county has designated zones and you are in the process of working to secure investments, have information, lessons learned or best practices to share, please share them with NACo staff: Daria Daniel at firstname.lastname@example.org and Jack Peterson at email@example.com.
To view the proposed U.S. Treasury Opportunity Zones regulations, click here.
To view guidance for taxpayers investing in Opportunity Zones, click here.
To view the IRS Frequently Asked Questions (FAQ) click here.