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Rep. Michelle Steele, R-California, introduced legislation to extend the opportunity zones (OZ) incentive by creating subsequent rounds of OZ designation, starting Jan. 1, 2027, with further designations every 10 years. The Growth and Opportunity Act (H.R. 4608) would therefore extend the date by which investors in qualified opportunity funds (QOFs) can exclude 10% of gains after holding the investment for five years from Dec. 31, 2026. Another bill introduced in the House would extend the tax deferral date by until Dec. 31, 2029.
Qualified opportunity funds (QOFs) tracked by Novogradac raised $17.52 billion in equity as of midyear, according to the Novogradac Opportunity Zones Investment Report: Data Through June 30, 2021, which was released today. The semiannual report includes information on the geographic and investment-type focus of more than 1,000 QOFs and includes the top 20 states and top 40 cities for planned investment, as well as the number of QOFs in each of several ranges of equity raised.
The Internal Revenue Service will publish in Thursday’s Federal Register corrections and correcting amendments to the final regulation for the opportunity zones (OZ) incentive released in December 2019 and published in the Federal Register in January 2020. The corrections include a clarification that startup businesses using the working capital safe harbor for property that would be nonqualified financial property except for the working capital safe harbor, are deemed to meet the 70% tangible property test during the working capital safe harbor period, while retaining the rule that the property is not treated as qualified OZ business property for any purpose. The correcting amendments change the language of both the preamble to the final regulations and the final regulations. The amendments are effective Thursday and are applicable on or after Jan. 13, 2020. The Opportunity Zones Working Group had requested the IRS address the issues included in the corrections.
Budget legislation signed by Ohio Gov. Mike DeWine includes a provision increasing the state opportunity zones (OZ) tax credit taxpayer cap per fiscal biennium to $2 million. The budget legislation retained the statewide cap of $50 million per fiscal biennium, but doubled the amount a single taxpayer can claim. The 10% credit is for investments in qualified opportunity funds that hold 100% of their invested assets in Ohio.
Rep. Jim Hagedorn, R-Minnesota, introduced legislation to increase the number of opportunity zones (OZs) and extend the OZ tax deferral date by three years. The Expanding Opportunity Zones Act of 2021 (H.R. 4177) would boost the percentage of low-income communities that each state that can designate as OZs from 25% to 30%, which would create an estimated 950 additional OZs across the nation.
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