Last week, in light of COVID-19, the Internal Revenue Service (IRS) announced various deadline extensions relating to the Opportunity Zone rules through the issuance of Notice 2020-39. Below is a brief summary of the extensions contained in Notice 2020?39.
- Extension of 180-Day Investment Period for QOF Investments. If the last day of the 180-day investment period within which a taxpayer must make an investment in a Qualified Opportunity Zone Fund (QOF) occurs on or after April 1, 2020, and before Dec. 31, 2020, the last day of the 180-day investment period is extended to Dec. 31, 2020.
- 90% Investment Standard for QOFs. Any failure of a QOF to satisfy the 90% investment standard for a testing period ending on or after April 1, 2020, and on or before Dec. 31, 2020, is no longer subject to penalty and is disregarded for purposes of determining the qualification of the QOF.
- 30-Month Substantial Improvement Period. The 30-month substantial improvement period related to acquired tangible property that was used prior to its acquisition is suspended for the period beginning on April 1, 2020, and ending on Dec. 31, 2020.
- 31-Month Working Capital Safe Harbor. All qualified opportunity zone businesses currently utilizing the 31-month working capital safe harbor are granted an automatic 24-month extension to spend the working capital on qualified property.
- 12-Month Reinvestment Period for QOFs. QOFs are granted an additional 12 months to reinvest in qualified opportunity zone property some or all of the proceeds received by the QOF from the return of capital or disposition of some or all of the QOF’s qualified opportunity zone property for which the original 12-month reinvestment period included Jan. 20, 2020.
For guidance on these issues, please contact a member of our Tax Group.
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