Submitted by Colleen Campbell, ERCGP Intern
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?
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.