In response to requests by the OZ industry professionals, Treasury and the IRS have released relief measures to the OZ incentive in the shape of postponing certain 2020 dates and extending timelines for meeting certain requirements, including:
• The last date for a taxpayer to make an investment in a QOF has been 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.
• In the case of any QOF, which 90% semi-annual testing dates fall between April 1, 2020 and Dec. 31, 2020, any failures by the QOF to satisfy such 90% test shall be treated as due to reasonable cause and shall be disregarded.
• The 30-month period to substantially improve tangible property is tolled for the period that begins on April 1, 2020, and ends on Dec. 31, 2020.
• Confirmation that the working capital safe harbor period is extended by an additional 24 months for qualified opportunity zone businesses holding working capital assets intended to be covered by the working capital safe harbor before Dec. 31, 2020, as long as the requirements for the working capital safe harbor are otherwise satisfied.
• A QOF’s 12-month reinvestment period (to reinvest in qualified opportunity zone property) for the proceeds from the QOF’s sale or disposition of qualified opportunity zone property or a redemption of qualified opportunity zone stock is extended by an additional 12 months where the original 12-month reinvestment period included Jan. 20, 2020, as long as the proceeds are invested in a manner originally intended by the QOF prior to Jan. 20, 2020.
Read the IRS’ full details on its “Relief for Qualified Opportunity Funds and Investors Affected by Ongoing Coronavirus Disease 2019 Pandemic” at https://www.irs.gov/pub/irs-drop/n-20-39.pdf.