The Latest IRS Guidance on Qualified Opportunity Zones

The Latest IRS Guidance on Qualified Opportunity Zones

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By Ann Ramage, CPA | Tax Partner

As the buzz continues to increase surrounding Qualified Opportunity Zones (“QOZ”) and Qualified Opportunity Zone Funds and Investments, the IRS has finally released the first of several sets of guidance as well as a DRAFT Form 8996 and related instructions that the QOZ Fund will use to self-certify annually that it meets the necessary requirements prescribed in The Tax Cuts and Jobs Act.  Friday October 18, 2018, the IRS issued Proposed Regulations as well as Revenue Ruling 2018 – 29, including clarification and guidance on the following topics with more guidance and clarification to come.


Keiter plans a series of blogs to discuss these topics in detail so stay tuned …

  • Basis on which assets are measured for the 90% Asset Test,
  • Working Capital Safe Harbor provision that may be used,
  • Guidance that the Qualified Opportunity Zone deferral election may be made in tandem with other elections, but only qualifies if the gain would otherwise be taxable if not for the QOZ election,
  • Guidance that land is not to be included in the base for determining if a taxpayer qualifies as an Opportunity Zone Fund/Investment via the substantial improvement requirement,
  • Guidance that the election to defer gain via a Qualified Opportunity Zone investment may be made by the partnership or at the member level, and
  • Guidance that an election is available to allow a taxpayer to continue gain deferral if the original Qualified Opportunity Fund property was sold in its entirety and the proceeds are reinvested in another Qualified Opportunity Zone investment according to the requirements.

Questions about QOZ or other tax changes under the Tax Cuts and Jobs Act? Contact us. We are here to help. Keiter teamEmail | 804.747.0000

Additional Related Tax Resources:

New Tax Benefits for Qualified Opportunity Zone (QOZ) Investments

2019 Tax Planning Guide

Sources:

https://www.irs.gov/pub/irs-drop/reg-115420-18.pdf

https://www.irs.gov/pub/irs-drop/rr-18-29.pdf

https://www.irs.gov/pub/irs-dft/f8996–dft.pdf

https://www.irs.gov/pub/irs-dft/i8996–dft.pdf


The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


About the Author

Ann has 20 years of experience providing tax planning opportunities and insights to operating entities, investment partnerships, trusts and high wealth individuals and families. Ann is a member of Keiter’s Family, Executive, and Entrepreneur Advisory Services team and works closely with individuals and family offices to address their various tax compliance, consulting and estate planning needs.

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