Opportunity Zone Magazine Volume 1, Issue 3 - Page 5

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occurs. This means that, in the event that a calendar year
pass-through entity generated an eligible gain in 2019,
a taxpayer who is allocated such gain, can use March
15, 2020, as the latest date to commence the 180-day
investment period. The taxpayer could also use Dec. 31,
2019, or the date of the taxable sale by the passthrough
entity to start the 180-day investment period. Note that
this assumes that the pass-through entity will not invest
directly in the QOF with respect to such gain.
The notice provides that the
last date for a taxpayer to
make an investment in a QOF
is extended to Dec. 31, 2020.
The Notice: The notice provides that the last date for a
taxpayer to make an investment in a QOF is extended to
Dec. 31, 2020, where the taxpayer’s 180-day investment
period has ended or will end between April 1, 2020,
and before Dec. 31, 2020. The following are a couple of
illustrations where the taxpayer has until Dec. 31, 2020, to
invest in a QOF with respect to an eligible gain created in
2019:
Jan. 20, 2020 in each one of these jurisdictions, which
includes every OZ.
With respect to the OZ incentive, the notice provides
extensions and postponements of some critical deadlines
in 2020 as follows:
INVESTORS - EXTENSION OF 180-DAY INVESTMENT
PERIOD
Background: In order to elect to defer some or all of
a taxpayer’s eligible gains resulting from the sale or
exchange of property with an unrelated person for federal
income tax purposes, a taxpayer must invest and acquire
a qualifying investment in a qualified opportunity fund (a
QOF) during the 180-day period beginning on the date of
which the gain would be recognized for federal income tax
purposes (i.e. the date of the taxable sale or exchange).
However, taxpayers who are equity holders of passthrough
entities are provided three different dates for
commencement of their 180-day investment period, one
of which provides that the 180-day investment period can
commence on the date that the federal income tax return
is due (without extensions) for the pass-through entity
for the taxable year in which the taxable sale or exchange
• Taxpayer directly sells an asset on or after Oct. 4,
2019, generating an eligible gain; and
• Taxpayer is allocated an eligible gain on Dec. 31, 2019,
from a calendar year pass-through entity that sold an
asset and generated the eligible gain in 2019.
QOFs - MORE TIME FOR THE QOF TO HOLD CASH BEFORE
INVESTING IN A QOZB
Background: A QOF is required to hold at least 90% of
its assets in qualified opportunity zone property (QOZP).
Failure to satisfy the 90% requirement can result in a
penalty on the QOF for each month of such failure. The
90% requirement is determined by taking the average of
the percentage of QOZP held by the QOF, as measured
on the last day of the first six-month period of the taxable
year of the QOF, and on the last day of the taxable year
of the QOF. However, no penalty shall be imposed with
respect to a failure to satisfy the 90% requirement where it
is shown that such failure is due to reasonable cause.
Generally, an equity interest acquired by the original
issuance for cash by the QOF in a domestic entity treated
as a corporation or a partnership for federal income tax
purposes that satisfies the requirements to be qualified
opportunity zone business (QOZB) is considered to be
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