S&W InfO-Zone Blog

Treasury Department Releases Investor-Friendly Proposed Opportunity Zones Regulations

Posted by Benjamin Armour on Oct 23, 2018 3:02:11 PM

On October 19, 2018, the Treasury Department issued highly-anticipated proposed regulations related to the U.S. Tax Cut and Jobs Act of 2017's Opportunity Zones Program (the "Proposed Regulations"). Taxpayers and investors have been anxiously awaiting guidance from the Treasury Department before funneling millions of dollars into the previously designated Opportunity Zones. The Proposed Regulations clarify certain fundamental aspects of the Opportunity Zone Program and address specific complex issues.

Ultimately, the Proposed Regulations confirm many of the theories and opinions that Sullivan & Worcester’s Opportunity Zones Practice Group previously advanced and provide several investor-friendly provisions that should dramatically accelerate the creation of Qualified Opportunity Funds ("QOFs") and the deployment of capital into Opportunity Zones. Although the Proposed Regulations are not final, and remain subject to a public comment period and further review by the Treasury Department, taxpayers and investors should feel confident relying on the Proposed Regulations.

The Proposed Regulations confirm several threshold issues, including:

  • Identity of the Taxpayer
  • Gains Eligible for Deferral
  • Entities Eligible to be Qualified Opportunity Funds (QOFs)
  • Certification of QOFs
  • Initial Compliance with the 90% Asset Test
  • The Definition of "Substantially All"

The Proposed Regulations also provide additional investor-friendly guidance that is largely a reaction to comments and suggestions received by the Treasury Department, including the following four provisions:

  • Special Allocations
  • Working Capital Safe Harbor
  • The Definition of "Substantial Improvement"
  • The Favorable Uses of Debt

Read the full summary in our Opportunity Zones Alert.

About the InfO-Zone Blog


Sullivan & Worcester's InfO-Zone blog features insight and analysis about Opportunity Zones, written by our multi-disciplinary team of lawyers from our Tax, Real Estate, Affordable Housing and Corporate practice groups. 

View our Opportunity Zones Update Page

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

 

Meet the Editor


John G. Balboni

John G. Balboni is a partner in our Boston-based Real Estate and Corporate Practice Groups. Mr. Balboni is a member of the firm's Management Committee and co-leader of the firm's Real Estate Group, focusing on debt and equity transactions. His practice in real estate and finance law includes private/preferred equity investing, structured real estate transactions, syndicated real estate projects, real estate crowdfunding, lending matters and fund formation. His clients include hedge funds, insurance companies, family offices, developers, investment banks, local, national and international banks, REITs and other institutional investors.

 

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