Opportunity Zone Regs Could Still Leave Openings For Abuse
Partner Nicole Elliott was interviewed by Law360 after the Treasury and the IRS issued proposed regulations and a revenue ruling on opportunity zones; when an investor sells an asset and reinvests the capital gains in a qualifying opportunity fund (QOF) then the taxpayer can defer tax on the gains until Dec. 31, 2026. Ms. Elliott discussed that many parts of the regulations are good because they are taxpayer-friendly as well as how the land banking section would not be a large threat since such a use would not qualify as an opportunity zone property.
“I don’t think you could qualify as a QOF if you just held land and did nothing with it, because you couldn’t meet original use/substantial improvement; also, I don’t think holding land is a trade or business, and [it is] definitely not an active business [for] a qualified opportunity zone business. So a land bank wouldn’t qualify for several reasons.” Ms. Elliott said.