OZ Working Group Letter Requests Further OZ Guidance
The Novogradac Opportunity Zones Working Group this week submitted to the Internal Revenue Service (IRS) a priority request for further opportunity zones (OZ) guidance. The letter said that taxpayer uncertainty around issues unaddressed by proposed guidance released Oct. 19 hinders investment in OZs.
The Novogradac Opportunity Zones Working Group requested guidance on: whether cash reserves held by an opportunity fund designated for investment in qualified OZ property is considered OZ property; whether gains realized by an opportunity fund for the sale or exchange of OZ property can be deferred if reinvested in replacement OZ property within 12 months of the sale or exchange; qualification of vacant land as OZ business property and whether substantial improvements made after Dec. 31, 2017, to property purchased before that date can be considered separate OZ business property. Some of these issues will require formal guidance, which could be included in the next round of regulations to be released. For some other issues, informal guidance could be provided through Treasury notices, revenue rulings or IRS FAQs.
Treasury and the IRS are working on additional published guidance, including additional proposed regulations, expected to be published in the near future.
A recording of the Novogradac Opportunity Zones Regulations Webinar provides an overview of the proposed guidance released so far.