Tax Delayed Is Tax Avoided: More Opportunity Zone Benefits

By Eric Kodesch and Lewis Horowitz (November 8, 2018, 2:42 PM EST) -- The December 2017 federal tax reform law, commonly (but incorrectly) referred to as the Tax Cuts and Jobs Act, included a new tax regime for investments in qualified opportunity zones. As described in more detail below, the new provision allows taxpayers to defer gain from a sale of appreciated assets until 2026, eliminate 15 percent of the deferred gain if they hold the assets long enough and avoid tax on any appreciation from the reinvestment of the gain if they hold the reinvestment long enough. Although the opportunity zone regime is designed to stimulate investments in low-income areas, due to the reliance on 2010 census information and the discretion given to governors to designate the opportunity zones in their states, in many cases taxpayers will be able to obtain the opportunity zone benefits for investments in neighborhoods that are already attracting investors. The IRS recently answered most of the questions necessary to launch this game-changing, tax-planning tool....

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