The new and final round of guidance on opportunity zones wasreleased in December, and many opportunity zone investors are stillunderstanding the impact. While the 500-page document highlightedmany aspects of the rules and regulations regarding opportunityzones, guidance related to the substantial improvement rule was oneof the most significant changes.

"The proposed regulations had an asset by asset test as to thesubstantial improvement rule," PhilJelsma, a partner and chair of the tax practiceteam at Crosbie Gliner Schiffman Southard &Swanson, tells GlobeSt.com. "Generally, with respect toproperty that has previously been depreciated, the taxpayer mustdouble its tax basis or costs during the first 30 months ofownership to satisfy a 'substantial improvement' test. Raw land or ground up' development does not need to meet this rulebut generally any property with existing structures that have beendepreciated would be subject to the substantial improvementtest."