By Kate McCurry, John I. Sanders, and Ali FennoLast year, Congress passed the Tax Cuts and Jobs Act (the “Act”), which contained a tax incentive program (the “Opportunity Zone Program”) to encourage long-term investments in low-income communities identified as “opportunity zones” by state governments. Specific details of the program were left to be fleshed out by the Treasury Department, leaving the financial industry anxious for proposed regulations that would determine the strength of the opportunity zone incentives. Those proposed regulations (the “Regulations”) were released last Friday. Under the Act, the Opportunity Zone Program allows investors to:
- Defer paying taxes on gains recognized from the sale of assets if those gains are re‑invested in qualified opportunity funds (“QOFs”); and
- Exclude from the calculation of taxable gross income any gains recognized from investments in QOFs that are held by the investor for at least ten years.
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