The TreasuryDepartment

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WASHINGTON, DC—The Treasury Department has released anotherround of proposed regulations clarifying how Opportunity Zoneinvestments and developments will work. Like earlier rounds, thesenew rules appear to be generally favorable to the commercial realestate industry.

At 169 pages, Treasury covered a lot of ground in this release.One important topic that was addressed was the question of whatactivities would meet the act of conduct requirement of a business,Jonathan W. Giokas, a partner with Husch Blackwell, tellsGlobeSt.com. “One key test for Opportunity Zone investments is thatan investor has to be engaged in an active conduct of business,” hesays. “In this new set of proposed rules it was determined thatleasing can meet the act of conduct requirement for abusiness.”

Another important measure, Giokas continues, is that the IRSprovided safe harbors that help determine how a business can meetthe gross income requirement in the Opportunity Zone program.“Those are based on the provision of services and the employment ofworkers.”