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Renewed Opportunities: Recent Bipartisan Proposal Seeks to Refine Opportunity Zone Development and Tax Incentives

April 18, 2022

Amanda Wilson | Alyson Hoffman

In 2017, the Tax Cuts and Jobs Acts (TCJA) created a capital gains investing program aimed at revitalizing impoverished neighborhoods in the United States, known as “Qualified Opportunity Zones.” The purpose of this program was, and is, to spur economic growth and job creation in low-income communities while providing tax benefits to investors and developers.

Currently, there are 8,700 Opportunity Zones spanning all 50 states, the District of Columbia and five United States territories.

The Opportunity Zone rules allow investors who reinvest recognized capital gains in a Qualified Opportunity Fund to defer and partially eliminate recognition of their invested capital gains. Investors can also avoid recognizing any gains on the exit from their Opportunity Zone investment if held for at least 10 years.

A full discussion of the tax benefits of an Opportunity Zone investment can be found here. Unfortunately, like many of the other provisions of the TCJA, the Opportunity Zone program is set to sunset at the end of 2026.

Earlier this month, a bipartisan group of lawmakers introduced The Opportunity Zones Transparency, Extension, and Improvement Act. This bipartisan legislation seeks to change and extend the Opportunity Zone program, by:

  • Extending the deadline for triggering the deferred capital gain from December 31, 2026 to December 31, 2028;
  • Lowering from 7 years to 6 years the holding period requirement for the forgiveness of 15% of the deferred capital gain;
  • Allowing Opportunity Funds to be feeder funds;
  • Mandating new reporting requirements for Qualified Opportunity Funds;
  • Re-evaluating the currently designated Opportunity Zones by sunsetting Opportunity Zone designation for areas at or above the 130% national mean income and allowing governors to replace such tracts with eligible high-need communities;
  • Creating a federal grant program for state governments to assist and encourage opportunity zone developments; and
  • Expanding eligibility for Opportunity Zones to now include former industrial areas known as “Brownfields.”

This legislation, while imposing some additional requirements on taxpayers investing in Opportunity Zones, overall provides positive benefits for taxpayers currently invested in or looking to invest in Opportunity Zones. 

We will keep you updated of any further developments regarding this bill as it moves through Congress.


This article is informational only. You should consult an attorney before acting or failing to act. The law may change rapidly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ALL ARTICLES ARE PROVIDED AS IS AND WITH ALL FAULTS. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.
Amanda

A member of the firm’s tax practice, Amanda Wilson concentrates on federal tax planning and structuring. She represents clients in a wide variety of complex federal tax matters with a particular emphasis on pass-through entities such as partnerships, S corporations and real estate investment trusts.

Specifically, Amanda focuses on advising clients on the formation, operation, acquisition and restructuring of such pass-through entities. In addition, she regularly advises clients on the structuring and operation of private equity funds, real estate funds and timber funds. Amanda is the author of the Bloomberg Tax Management Portfolio 718-3rd Edition, Partnerships- Disposition of Partnership Interests or Partnership Business; Partnership Termination.

Amanda regularly works in structuring deals to benefit from tax advantaged structures, including like-kind exchanges, new market tax credits, low income housing tax credits, qualified opportunity zones, and investment tax credits available for solar and other renewable energy. Amanda also has extensive experience in corporate planning and international tax matters, as well as federal tax controversy. Her practice before the Internal Revenue Service (IRS) includes providing advice on audits and appeals, drafting protests and ruling requests, and negotiating settlements.

Prior to joining the firm, Amanda worked for Sutherland Asbill & Brennan LLP (now Eversheds Sutherland), an Am Law 100 firm in the Atlanta office, where she was part of Sutherland’s Tax Practice Group. Amanda has also served as an adjunct professor at Emory University School of Law where she taught Partnership Taxation.

Amanda regularly contributes to the firm’s Taxing Times blog and is a regular panelist on tax webinars hosted by Strafford Publications.

Alyson

Alyson C. Hoffman is an attorney in the Corporate, Business and Tax Department, working out of the firm's Orlando and Melbourne offices. She primarily focuses her practice on sophisticated estate planning and complex estate and trust administration.

Committed to knowing her clients personally and understanding their goals, Alyson provides valued support and guidance to ensure their needs are met and help them achieve peace of mind. She enjoys building and maintaining long-term relationships with new and existing clients based on trust and personal service. 

Prior to joining Lowndes, Alyson worked at a law firm in Bethesda, Maryland, where she handled a variety of complex matters related to probate and trust administration, elder law and estate planning for high-net-worth individuals. She also has experience representing restaurants and alcohol distributors in administrative hearings, beverage licensing and lobbying for various wholesalers.

Alyson earned her undergraduate degree in Political Science from the University of Florida – Hume Honors College and her law degree, with a Certificate in Intellectual Property, from the Catholic University of America Columbus School of Law. While in law school, she was recognized with Book Awards in both Advanced Trial Practice and Agency & Partnership. Alyson is also a Level 2 Sommelier under the United States Sommelier Association.

A Melbourne native, Alyson is active within the local community where she serves as a member of both the Brevard Zoo's Planned Giving Committee and the Melbourne Central Catholic High School's Advisory Council. She also volunteers with Brevard Family Partnership and Friends of Children of Brevard County and as a member of 321 Millennials, an organization that is focused on building the community and economy within Florida's Space Coast. In her free time, Alyson enjoys yoga, dancing, cooking, boating and taking advantage of all the outdoor activities that Florida has to offer.

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