Opportunity Zones News Briefs – August 2019

Thursday, August 1, 2019

Legislation introduced in the Michigan state Senate June 13 would create a tax credit for qualified research and development (R&D) expenses related to the automotive industry in opportunity zones (OZs). S.B. 378 would allow a credit for a percentage of the difference between the taxpayer’s R&D expenses in an OZ and expenses in an OZ during the three-year base period, with a formula to determine the credit if the taxpayer didn’t incur qualified R&D expenses in the base period. 

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The Internal Revenue Service (IRS) updated its Opportunity Zones Frequently Asked Questions page in late June to affirm that a taxpayer who invests an Internal Revenue Code (IRC) Section 1231 gain into a qualified opportunity fund before the last day the 2018 tax year, but during the 180-day period beginning with the realization of an IRC Section 1231 gain, can make a valid deferral election based on that investment because the tax year ended before May 1, 2019. The election will not impair the taxpayer’s ability to rely on all other aspects of proposed regulations published May 1, 2019.

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The IRS published Notice 2019-42 in the Internal Revenue Bulletin 2019-29 July 15. The notice adds two census tracts in Puerto Rico to the list of federal OZs. Both tracts were eligible under 2012-2016 American Community Survey data after not being eligible under 2011-2015 data. 

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Walker & Dunlop announced $21 million in financing June 6 for Kodak Crossing in Kodak, Tenn. The new multifamily development would be located within Sevier County, a Tennessee OZ. Walker & Dunlop arranged the loan through HUD’s 221(d)(4) new construction program. Once complete, Kodak Crossing, a pet-friendly workforce housing complex, will offer 192 affordable one-, two- and three-bedroom apartments. 

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The U.S. Economic Development Administration announced June 5 a $3 million investment in Central Wyoming College in Riverton, Wyo. The funding will go to the construction of an agriculture-focused training facility. Development will include an approximately 85,000-square-foot Agriculture and Animal Science building with classrooms, laboratories, open spaces, offices and learning areas needed to support the Agriculture and Animal Science curriculum offered by Central Wyoming College. The development will be located in an OZ and will be matched with $2.5 million in local funds. It is expected to help create more than 100 jobs.

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The Alabama Department of Economic and Community Affairs is seeking feedback and recommendations concerning OZs to help implement the Alabama Incentives Modernization Act. That legislation provides tax credits and other incentives for investment in the state’s OZs. The deadline for feedback was 
5 p.m. ET July 26.

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A provision in Rhode Island’s fiscal year 2020 state budget, signed by the Gov. Gina Raimondo July 5, allows taxpayers to avoid paying capital gains taxes on OZ investments after holding the investment seven years. The provision is similar to the federal OZ incentive provision that allows the same benefit after 10 years.

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