On October 19, the Department of the Treasury released
taxpayer-friendly proposed regulations (the "Proposed
Regulations") under Section 1400Z of the Tax Code. Due to the
lack of administrative guidance, fund managers and other investors
have hesitated taking advantage of new tax benefits designed to
incentivize private sector investment into economically-distressed
"opportunity zones." The Proposed Regulations have been
well received and will cause many investments to move forward.
Opportunity Zone Tax Benefits
As part of the Tax Cuts and Jobs Act enacted into law in
December 2017, the Opportunity Zone statute (codified as Section
1400Z of the Tax Code) provides two main tax incentives designed to
encourage investment in opportunity zones. First, the legislation
allows for the deferral of gain to the extent that corresponding
amounts are reinvested into one of more "qualified opportunity
funds" (or QOFs). Second, the legislation excludes from gross
income the
