Erie Chamber Blog
Monday January 20, 2020 
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Friday January 17, 2020 

Registration Open for this New Event

The Erie Regional Chamber and Growth Partnership is excited to offer a brand-new event convening business leaders, community advocates, and our local elected officials to discuss the collective vision for growth with the City of Erie and Erie County.

This first of many advocacy related events is set for Wednesday, February 26th at the Bayfront Convention Center.

Transformative change requires the public and private sectors to align. By working together, we can create unique policies that spark economic growth or enhance the quality of our community in a way that retains and attracts talent and businesses to Erie. Join us to learn more about the collaborative momentum across government entities and how you can get involved. Special guests include County Executive Kathy Dahlkemper, Mayor Joseph Schember from the City of Erie, and leaders from the economic development and business community.

During our panel discussion about the five core pillars for collective growth, there will be an opportunity for question and answers between attendees and panelists. Join us as we continue working together to create a vibrant community in Erie!

For complete details and to register, visit eriepa.com.

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Thursday January 16, 2020 

Submitted by Colleen Campbell, ERCGP Intern

Part 2

An inclusion event is an occurrence which breaks the chain of deferment and the benefit of investing in a Qualified Opportunity Fund (QOF). Once an inclusion event has occurred, capital gains that were once deferred as an investment in a QOF must then be included as the investing individual or entity’s taxable income. These occurrences may be as simple as an investor choosing to reduce the amount of their investment in a fund, however, the U.S. Treasury Department and Internal Revenue Service enumerated a number of specific events in their recent release of final regulations that will terminate an investor’s deferment of capital gains. The updates also clarify occurrences that do not qualify as inclusion events.

The update describes a number of circumstances which qualified as inclusion events in the proposed legislation, including “a transfer of a qualifying investment, to the extent the transfer reduces the taxpayer’s direct equity interest, the receipt of a distribution on or with respect to a qualifying investment, which constitutes an impermissible ‘‘cashing out’’ of the taxpayer’s qualifying investment, or the claim of a worthlessness deduction…in respect of a qualifying investment.”

Forbes lists occurrences that are not inclusion events, which include “liquidation of a corporate owner of a QOF if the liquidation is into a parent who owns 80 [percent] of the taxpayer, …transfer of an investment in a QOF at death, contribution of a QOF interest to a grantor trust, provided the taxpayer is the deemed owner of the trust, [and] …the making or revocation of an S election.”

The final regulations respond to a number of comments that were made on the proposed legislation pertaining to a number of specific inclusion events based on the kind of entity investing in the QOF and the nuances in numerous possible situations. The update also clarifies the U.S. Treasury Department and Internal Revenue’s positions on the following general provisions:

  • Gains from inclusion events are eligible for deferment if the inclusion event is only related to a portion of the taxpayer’s investment and the gains are invested in a different QOF.
  • The general rule for inclusion events is clarified; the rule was not meant to suggest that a taxpayer may avoid an inclusion event by maintaining an indirect interest in a QOF.
  • Decertification of a QOF is an inclusion event that will terminate deferment of a taxpayer’s invested gains.
  • A reduction in an investor’s shareholder interest in a QOF does not qualify as an exclusion event. In other words, if a QOF should choose to issue additional stock, an inclusion event does not occur simply because an investor’s proportionate share of the fund decreases.
  • The gift of an interest in a QOF is an inclusion event. Transfers between spouses and transfers arising from divorce are also inclusion events.
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Friday January 10, 2020 

Submitted by Colleen Campbell, ERCGP Intern

Part 1

Interest surrounding the Opportunity Zones tax incentive has been met with clarity as the U.S. Treasury Department and Internal Revenue Service released a set of final regulations on December 19, 2019. This update responded to a number of comments and questions that were made with regard to the proposed legislation and offered prospective beneficiaries a long-awaited, 544-page set of answers. The subsequent series of blogs will serve to outline some of the updates including those pertaining to Section 1231 Assets, Inclusion Events, Original Use, and Substantial Improvement. This post, however, will begin by outlining qualifying investments and general reporting requirements. (You can view the Tax Cuts and Jobs Act of 2017 here, and the second set of proposals here.)

What kind of gains may be invested in a Qualified Opportunity Fund?

  • Revenue from the sale of business property may be invested in a QOF, provided that the investment is made within 180 days of the sale of the asset.
  • Gains from partnerships, S Corps, trusts, and estates may also be invested in a QOF. The taxpayer must invest any gain within 180 days from the due date of the entity’s tax return. The due date shall not include any extensions.
  • Taxpayers may also invest gains from an Investment of Regulated Investment Company (RIC) and Real Estate Investment Trust (REIT). The 180-day investment period may begin with the close of the shareholder’s tax year or when the shareholder receives the dividends from the RIC or REIT which they will invest in the QOF.
  • Revenue from Installment Sales may be invested in a QOF, even if the initial sale occurred prior to 2018. The taxpayer may begin the 180-day investment period for each installment on the date when the payment is received or on the last day of the taxable year when the payment is received.
  • Nonresident investments may also be made so long as they are “effectively connected to a U.S. business or trade.”

What are the reporting requirements for investing in a Qualified Opportunity Fund?

                Despite a number of comments requesting additional reporting requirements (and even some comments requesting fewer requirements), the final regulations did not alleviate or impose any additional burdens on investors. Rather, taxpayers must still complete Form 8996 and are required to annually report whether deferred gains remain deferred at the end of each tax year.

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Tuesday January 7, 2020 

submitted by Laurie Knoll, Marketing Communications Specialist NWIRC

Manufacturing companies are seeing an impact from their participation with NWIRC’s Lean Together programs. New cohorts for Lean Together 1.0 are starting soon throughout the region. It’s a 9-month collaborative learning program focused on developing true and lasting cultural changes, where everyone’s job is making small incremental improvements, every day. Sessions are facilitated by lean expert, Craig Corsi, and include facility tours, discussion focused on the book, 2 Second Lean, by Paul Akers, and company-specific onsite assistance. Below are the upcoming regional start dates:

Contact Molly Reichard for more information about getting started at (814) 217-6067. Find additional information at www.nwirc.org/lean-together.

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