The IRS describes an opportunity zone as "an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment." How does a community become an opportunity zone? Localities qualify as opportunity zones when they've been nominated by their states. Then, the Secretary of the U.S. Treasury certifies the nomination. The Treasury Secretary delegates authority to the IRS.
The Tax Cuts and Jobs Act added opportunity zones to the tax code. The IRS says opportunity zones are new, although there have been other provisions in the past to help communities in need with tax incentives to spur business.
The new wrinkle is how opportunity zones are designed to stimulate economic development via tax benefits for investors.
The first set of opportunity zones covers parts of 18 states and was designated on April 9, 2018. Since then, there have been opportunity zones added to parts of all 50 states, the District of Columbia and five U.S. territories. More details are available on the U.S. Treasury website.
Opportunity zones are still very much a work in progress. Indeed, the IRS had not finalized the form and instructions by the first week of November. However, over the next few months, the Treasury Department and the IRS will provide further details.
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