March Opportunity Zone Tax Deadlines
March is upon us. Why does that matter? The U.S. Treasury Department released final regulations for the Qualified Opportunity Zone Program 12/19/2019 and the IRS released Notice 2021-10 on 1/19/2021, and March is a significant month. Investors have additional flexibility for certain gains realized in 2019 and all gains realized in 2020 that are still eligible for the QOZ Program through March 31, 2021.
Section 1231 Property Gains
2019 Section 1231 property gains have until March 31, 2021 to complete a Qualified Opportunity Fund investment. Beginning on January 1, 2021, investors with newly generated Section 1231 property gains after January 1, 2021 will only have 180 days to invest in a Qualified Opportunity Fund.
K-1 Partnership Gains
K-1 gains realized in 2019 also have until March 31, 2021 to complete an investment in a QOF and have three options for calculating their 180 day window resulting in additional planning options for financial advisors well beyond March 31:
180 days starting with the date the asset is sold;
180 days beginning on the last day of the partnership’s taxable year (December 31st for a calendar year partnership); or
180 days starting on the date the partnership’s tax return is due, without any extension (March 15th for a calendar year partnership).
A few more notable points from Notice 2021-10
· 30-month substantial improvement period
· 90% investment standard for QOFs
· Working capital safe harbor for Qualified Opportunity Zone Businesses
· 12-month reinvestment period for QOFs
View the full IRS release here - https://bit.ly/3q5dpXF
View the full Treasury release here - https://bit.ly/2ZZjCJV
The Haney Company does not provide tax advice, please consult your CPA or tax advisor before making any investment decisions.