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The final guidance on the opportunity zone legislation has been released, and it was good news for opportunity zone investors, particularly in terms of timing. The new regulations allow for more flexibility in timing than investors originally thought. The final document was more than 500 pages of guidance clarifying the timing questions for the investment and formation of an opportunity zone fund.

“The final regulations provide that gains associated with depreciable property used in a trade or business, which are referred to as Section 1231 Gains can be invested within the 180-day period after the asset is disposed of.  Under the proposed regulations, the 180-day period for investing these gains began on December 31 of each tax year,” Phil Jelsma, a partner and chair of the tax practice team at Crosbie Gliner Schiffman Southard & Swanson, tells GlobeSt.com. “In addition, the final regulations allow the investor to place the total or gross amount of the Section 1231 Gains without having to later reduce it by 1231 Losses.”

The guidance also allows for flexibility in the formation of a qualified opportunity zone. “The IRS recognized that often these decisions are based on information provided by partnerships, LLCs and S corporations through Schedule K-1s,” says Jelsma. “If this information is not received timely, it is difficult for the investor to make clear decisions.  As a result, many investors are unsure what to do until they receive their Schedule K-1s.  The final regulations give partners, members and S corporation shareholders up to 180 days from the due date of the entity’s tax return, typically March 15, to make an investment in a QOF.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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