Opportunity Zones are an economic development tool to spur tax-favored investments in distressed communities throughout the country and in U.S. territories. Recently enacted provision (Section 1400Z-2) provides certain benefits for investment in these opportunity zones through investment in qualified opportunity funds. Qualified Opportunity Funds must be either a partnership or corporation organized for the purpose of investing in eligible property located in a designated Qualified Opportunity Zone.
After investing capital gains in a Qualified Opportunity Fund (QOF), investors realize these benefits:
- Defer recognition of those gains invested in a QOF until the date the investment is sold or exchanged, or December 31, 2026.
- Through basis step-up, a 10 percent exclusion of the deferred gain after five years, which grows to 15 percent after seven years.
- Elimination of tax on a gain from the sale of the investment if held for at least 10 years.
To maintain eligibility as a Qualified Opportunity Fund and avoid penalties, the corporation or partnership that sets up as a QOF must meet recordkeeping requirements to provide proof of basis and eligibility for the exclusion of the deferred gain. Investors also have recordkeeping requirements to which they must adhere.
Contesting IRS Levy
Individuals and businesses have additional time to file an administrative claim or to bring a civil action for wrongful levy or seizure. TCJA extended the time limit for filing an administrative claim and for bringing a suit for wrongful levy from nine months to two years.
For more information, see filing a wrongful levy claim.