On October 29, 2018, Treasury and the IRS issued proposed regulations (REG-115420-18) that provide guidance relating to the type of gains that may be deferred, the time by which deferred gain must be invested in a QOF, and the manner in which investors may elect to defer specified gains. In addition, the proposed regulations contain rules for self-certification of QOFs and the valuation of QOF assets. The proposed regulations also provide guidance to QOZBs, including a definition of qualified opportunity zone business property (QOZBP). The proposed regulations generally would be effective on or after the date the final regulations are published in the Federal Register.
Taxpayers may rely on the proposed regulations now, as long as they consistently apply all of the rules:
- Deferring Tax on Capital Gains by Investing In Opportunity Zones: Prop. Reg. §1.1400Z2(a)-1
- Investments Held for At Least 10 Years: Prop. Reg. §1.1400Z2(c)-1
- Qualified Opportunity Funds: Prop. Reg. §1.1400Z2(d)-1
- Treatment of Investments With Mixed Funds: Prop. Reg. §1.1400Z2(e)-1
- This roadmap highlights key takeaways from the proposed regulations.