Today in Washington – October 22, 2018
October 22, 2018
Source: Elizabeth Sullivan – Director of Government Relations
Treasury Releases Proposed Regulations on Opportunity Zones Designed to Incentivize Investment in American Communities
IRS Seeks Comment on Opportunity Zones
The IRS has released proposed regulations on Opportunity Zones. The proposed regulations clarify that almost all capital gains qualify for deferral. In the case of a capital gain experienced by a partnership, the rules allow either a partnership or its partners to elect deferral, with similar rules applying to other pass-through entities, such as S corporations and their shareholders, and estates and trusts and their beneficiaries.
The proposed regulations also provide that if at least 70% of the tangible business property owned or leased by a trade or business is qualified opportunity zone business property, the requirement that “substantially all” of such tangible business property is qualified opportunity zone business property can be satisfied if other requirements are met. If the tangible property is a building, the proposed regulations provide that “substantial improvement” is measured based only on the basis of the building. The IRS seeks comments on these proposed regulations, with the comment period ending the third week of December.
Additionally, Treasury and the IRS issued an additional piece of guidance to aid taxpayers in participating in the qualified Opportunity Zone incentive. You may view the guidance here.