Opportunity Zones (Federal)

Opportunity Zones Frequently Asked Questions What's Hot News Releases Multimedia Center Tax Relief in Disaster Situations Tax Reform News Guidance Forms and Instructions Resources Taxpayer First Act Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips e-News Subscriptions IRS Guidance Media Contacts IRS Statements and Announcements Qualified Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act. These zones are designed to spur economic development and job creation in distressed communities throughout the country and U.S. possessions by providing tax benefits to investors who invest eligible capital into these communities. Taxpayers may defer tax on eligible capital gains by making an appropriate investment in a Qualified Opportunity Fund and meeting other requirements. Opportunity zones – general information Designated Qualified Opportunity Zones Investor deferring gains Investor property rules Investor adjusting basis to fair market value Qualified Opportunity Funds (QOF) QOF property rules QOF 50-percent of gross income test More information Opportunity zones – general information Use tab to go to the next focusable element Q. What is an opportunity zone? Q. How were opportunity zones created? Q. Have opportunity zones been around a long time? Q. What is the purpose of opportunity zones? Q. How do opportunity zones spur economic development? Designated Qualified Opportunity Zones Q. Do I need to live in an opportunity zone to take advantage of the tax benefits? Q. I am interested in knowing where the opportunity zones are located. Is there a list of opportunity zones available? Q. What do the numbers mean on the Qualified Opportunity Zones list, Notice 2018-48? Q. How can I find the census tract number for a specific address? Investor deferring gains Q. I sold some stock for a gain in 2018, and, during the 180-day period beginning on the date of the sale, I invested the amount of the gain in a Qualified Opportunity Fund. Can I defer paying tax on that gain? Q. How do I elect to defer my gain on the 2018 sale of the stock? Q. I sold some stock on December 15, 2017, and, during the required 180-day period, I invested the amount of the gain in a Qualified Opportunity Fund. Can I elect to defer tax on that gain? Q. Can I still elect to defer tax on that gain if I have already filed my tax return? Q. I deferred a gain based on an investment in a QOF, and now that QOF has dissolved before the end of my deferral period. What happens to my deferred gain? Q. I deferred a gain based on an investment in a QOF, and now I gave the investment to my child before the deferral period had ended. Is there anything that I need to do? Q. Can I defer section 1231 capital gain net income for a taxable year under the opportunity zone rules? Q. Before the last day of my 2018 tax year but during the 180-day period beginning with the realization of a section 1231 gain, I invested the amount of that section 1231 gain into a QOF. The amount that I invested was less than my 2018 net section 1231 gain. Can I make a valid deferral election based on that investment, even though proposed regulations say that the 180-day period for my net section 1231 gain began on December 31, 2018? Investor property rules Q. Can I transfer property other than cash as an investment to a QOF? Q. When I transfer property to a QOF, does my holding period of the property also transfer to my QOF eligible investment? Investor adjusting basis to fair market value Q. I made an investment in a QOF. After holding it for at least 10 years, I sell or exchange it. Can I adjust the basis to fair market value? Q. I had ordinary gain from the sale of property in 2018. During the 180-day period beginning on the date of the sale, I invested the amount of that gain in a QOF. In 2029, I sell my interest in the QOF. Can I adjust my basis to fair market value? Qualified Opportunity Funds (QOF) Q. What is a Qualified Opportunity Fund? Q. I am interested in forming a Qualified Opportunity Fund. Is there a list of opportunity zone available in which the Fund can invest? Q. How does a corporation or partnership become certified as a Qualified Opportunity Fund? Q. Can a limited liability company (LLC) be an Opportunity Fund? QOF property rules Q. When is tangible property “original use” tangible property? Q. Can inventory in transit be “Qualified Opportunity Zone business property"? QOF 50-percent of gross income test Q. What is the 50-percent-of-gross-income test? Q. Must a Qualified Opportunity Zone business meet all three safe harbors to satisfy the 50-percent-of-gross income test? More information Q. How can I get more information about opportunity zones?