Final Regulations On Opportunity Zones

On December 19, 2019, the Internal Revenue Service (the "IRS") and the U.S. Department of the Treasury (the "Treasury") issued final regulations (the "Final Regulations") under section 1400Z-2 of the Internal Revenue Code¹ regarding the opportunity zone program, which was enacted as part of the law commonly referred to as the "Tax Cuts and Jobs Act".² The opportunity zone program is designed to encourage investment in distressed communities designated as "qualified opportunity zones" ("opportunity zones") by providing tax incentives to invest in "qualified opportunity funds" ("QOFs") that, in turn, invest directly or indirectly in the opportunity zones.

The opportunity zone statute left many uncertainties regarding the fundamental operations of the opportunity zone program. The IRS and Treasury issued two sets of proposed regulations under section 1400Z-2 in October 2018 and April 2019 (the "Proposed Regulations"). The Proposed Regulations were discussed in two of