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What is the Opportunity Zone?
The recent tax law, Public Law 115-97 (the “Tax Act”) enacted the new Opportunity Zone programs.  We have issued three Alerts on this topic (;;   However, we are already near the end of the phase for designating opportunity zones under the Tax Act.  Our blog last Friday noted great links for Massachusetts.  Most states have their own designation websites and you can also consult the federal site.  The following Information Resource can be accessed at

Governors cannot designate more than 25% of a state’s low-income community (“LIC”) census tracts (if fewer than 100 such tracts, then the State is limited to 25 QOZs).  Eligible LIC areas are basically those that qualify for the New Markets Tax Credits (“NMTCs”). Non-LIC contiguous tracts can be no more than 5% of the tracts designated in a State. Designations are due by March 21, 2018; however, Governors may request a thirty-day extension of this deadline to April 20, 2018. 
The Opportunity Zone Act is codified in Sections 1400Z–1 and 1400Z–2 of the Internal Revenue Code.  On February 8, 2018, the IRS published clarifying guidance in Rev. Proc. 2018-16. The Investment in Opportunity Act requires the designation of“Qualified Opportunity Zones” (“QOZs”) within low-income communities. Investors can create “Qualified Opportunity Funds” (“QOFs”) – private sector investment vehicles to fund development and redevelopment projects in QOZs.  Investors, which can be individuals or corporations, can achieve a tax deferral, and possible exclusion, for capital gains that are reinvested into a QOF.  If a taxpayer generates capital gains and invests that amount into a QOF within 180 days, the tax will be deferred until the fund investment is sold or exchanged. If the taxpayer holds the investment for five years, the taxpayer will pay only 90% of the original gain. If the investment is held for seven years, only 85% of the original gain will be recognized. If the investment is held for ten years, the increase in the value of the fund investment is excluded from taxation.  The deferred gain is recognized on the earlier of sale of the QOZ investment or December 31, 2026. And, the deferral must be invested before December 31, 2026. 


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