Comment Letter Submitted Regarding Round Two Guidance

Date: June 19, 2019

Publication: Thompson Hine Update

Read a comment letter sent to the IRS on June 19 requesting guidance regarding the April 17, 2019 Round Two Guidance on the Opportunity Zones provisions and seven areas that need further guidance:

  1. Providing flexibility to allow the investment of 1231 gains in a QOF during the tax year that the gain is recognized.
  2. Clarification of when the extension to the 31-month safe harbor for governmental delays is available.
  3. Mechanics and operational aspects with the new provisions allowing purchases of qualifying equity interests in a QOF from an original investor. An even more expanded application of this new rule has been raised by a Treasury representative.
  4. Development of safe harbors to satisfy the requirement that substantially all (70%) of the use of qualifying tangible property be in an OZ.
  5. Application of requirement that substantial portion (40%) of intangible property be used in active conduct of nosiness in OZ.
  6. Satisfying OZ requirements when existing building needs substantial improvements and current owners have capital gain dollars.
  7. Recognition of NQFP 31-month period in overlapping NMTC projects as reasonable amount of working capital.

For more information, please contact Frank Ferrante or any member of the firm’s real estate or commercial and public finance groups.