Opportunity Zone Update: New Proposed Regulations Released

Contact: Benjamin Farber and Patrick Fitzgerald, Phillips Lytle
Posted May 1, 2019

The United States Treasury Department released on Wednesday long-awaited new proposed regulations (“New Regulations”) to the Opportunity Zone Program, a tax incentive program created by the Tax Cuts and Jobs Act of 2017. The Opportunity Zone Program was designed to increase investment in certain economically distressed communities designated as “Opportunity Zones” by providing tax incentives to investors that reinvest gains from the sale or exchange of their capital assets into “Qualified Opportunity Funds,” which deploy capital (i.e., proceeds from the sale or exchange of capital assets) into qualified development projects or businesses located in those Opportunity Zones. While the incentives associated with the Opportunity Zone Program could prove to be significant, a substantial amount of uncertainty surrounded the Program and, more importantly, its practical implementation and eventual impacts; as a result, many developers and investors have been anxiously awaiting further guidance in the form of additional regulations prior to giving further consideration to the Opportunity Zone Program.

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