Second Round of Proposed Qualified Opportunity Zone Regulations Under Review

Significantly behind the originally published timeframe, the second round of proposed regulations related to the Qualified Opportunity Zone program is currently under review at the Office of Information and Regulatory Affairs.
 
The following issues still need to be addressed: 

• The meaning of “substantially all” in each of the various places it appears in the regs;
• The types of transactions that may trigger inclusion of the gain that has been deferred under the QO Zone election — for example, whether or not operating or debt financed distributions made by the QO Fund to the investors triggers the gain that was originally deferred;
• The definition of a “reasonable period” for a QO Fund to invest gain dollars received from investors without paying a penalty;
• Administrative rules for when a QO Fund fails to maintain the required 90% investment standard;
• Information-reporting requirements for QO Funds. 

While these issues are expected to be seen in the second set of proposed regulations, indications are there may yet be a third round.
 
Please contact a member of your service team, or contact Dave Sobochan at dsobochan@cohencpa.com for further discussion.
 
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.