Tax reform readiness: Opportunity Zones — realizing benefits and avoiding pitfalls

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November 2018

Overview

The 2017 tax reform act (the Act) introduced a tax incentive program called Opportunity Zones. An Opportunity Zone is a specially designated, economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment — specifically, elective deferral of capital gains tax on such investments. The Treasury Department, on October 19, issued proposed regulations on the Opportunity Zones program.

PwC on October 30 hosted a webcast featuring PwC specialists who discussed the key aspects of the proposed Opportunity Zone regulations. This Insight highlights those discussions.  Watch the webcast replay and register for future webcasts in PwC’s Tax Reform Readiness series, which addresses other areas affected by tax reform.

For prior coverage of Opportunity Zones, see PwC Insight, Opportunity Zones proposed Treasury regulations clarify uncertainties, October 24, 2018.

The next Tax Reform Readiness webcast, which is expected to cover the Section 263A regulations, is scheduled for Wednesday, November 14, from 2:00 PM - 3:00 PM (EDT).

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The takeaway

The proposed regulations provide answers to many questions that were deterring taxpayers from investing in Opportunity Zones, but still leave other questions unanswered. Treasury and the IRS have requested comments on these open issues. The comment period closes on December 28, 2018. In the meantime, taxpayers should analyze the proposed regulations to determine whether they might be able to benefit from the Opportunity Zone program.

Observation: When asked during the October 30 webcast where they are in the process with respect to Opportunity Zone funds, 44% of respondents said they are still trying to learn more to see if it makes sense to set one up.

Contact us

Adam Feuerstein

Principal, Real Estate Tax, PwC US

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