The Land of OZ Explained – Understanding the New Opportunity Zone Proposed Regulations

01.11.2018 | 11/1/18 (Boston) and 11/8/18 (New York)

After an astonishing number of postponements and false starts, the Treasury Department, on October 19, 2018, released its long-anticipated guidance (first edition) on the incredibly exciting, but also amazingly convoluted, Opportunity Zone tax incentives contained in Code Sections 1400Z–2 (the “OZ Act”).

The quick highlights were that the Treasury provided clear and important guidance on many of the gate-keeping issues affecting the OZ Act, including who is a taxpayer eligible to participate, what is eligible gain, and how to set up and operate a Qualified Opportunity Fund (QOF). The guidance also provided a variety of pragmatic rules that will make it easier (rather than harder) to take advantage of the tax incentives.

Through an open dialogue format at this seminar, we reviewed and discussed the issues addressed in the Treasury guidance and looked at practical examples of how to structure investments in light of the guidance, including:

  • Who is the correct party/taxpayer to invest in an O-Fund
  • How can an O-Fund safely hold cash
  • Rolling over gain from an investment sold prior to year 10
  • Understanding the use of leverage in these structures
  • We will also identify the key issues that are not yet answered and that remain for future guidance.

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