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IRS Issues Guidance on Qualified Opportunity Zones Investment

April 24, 2019

The U.S. Internal Revenue Service (IRS) has issued guidance on investing in qualified opportunity zones (QOZ) based on a provision in the Tax Cuts and Jobs Act (TCJA) aimed at encouraging investments in low-income communities. Three tax incentives are offered to a taxpayer who invests in a business located in a QOZ:

  • Temporary deferral of capital gains to the extent those gains are reinvested into a QOF
  • Partial exclusion of previously deferred gains when certain holding period requirements in a QOF are met
  • Permanent exclusion of post-acquisition gains from the sale of an investment in a QOF held longer than 10 years

The new guidance also clarifies the "substantially all" requirements for the holding period and use of the tangible business property. Read more (PDF) at the IRS website.