When the Tax Cuts and Jobs Act was being negotiated and considered by Congress at the end of 2017, most practitioners, developers, and business owners were trying to assess its impacts on the mortgage interest limitation, the cap on the state and local tax deduction, 1031 exchanges, immediate expensing of business assets, and other key issues. In that flurry of negotiation and analysis, a powerful federal tax incentive was added to the law that could lead to a vast transfer of wealth while also funding the revitalization of some of the country’s most distressed areas. That new powerful tool is the Opportunity Zone program.

The basic goal of the Opportunity Zone program is to unlock unrealized capital gains being held by companies and individuals and direct that capital towards businesses and projects in certain distressed areas. This is accomplished by incentivizing prospective investors to sell appreciated property and reinvest the gains into qualified Opportunity Zone projects through offering attractive tax incentives—three tax incentives to be precise.

Continue Reading Opportunity Zones: What is All the Fuss About?

Sills Cummis has learned that later today the Internal Revenue Service will be releasing the long-awaited regulations for the new federal Opportunity Zone program together with a revenue ruling and a key document, the Form 8996 for self-certification by OZ funds.  Please return to this site over the weekend and beyond for a continually-updated summary and analysis of the program rules.

The federal opportunity zone program offers the potential for directing new and significant capital investment to some of the country’s areas in need of development.  When describing the program, we have referred to it as the next big thing in economic development that could usher in the greatest transfer of wealth this country has seen in decades. However, as federal regulators continue to delay in issuing any meaningful guidance, many investors, fund managers and project developers are waiting on the sidelines until some of the biggest questions and uncertainties surrounding the program get resolved. Furthermore, as more examples are fleshed out and discussed amongst practitioners, investing in a Qualified Opportunity Fund may not be the optimal investment strategy for certain taxpayers depending on the specific facts involved. This is particularly true in the case of taxpayers who own appreciated real estate; for them, 1031 like-kind exchanges may still be more attractive.

Continue Reading Opportunity Zones—Curb Your Enthusiasm (Maybe…)

As seen on: HousingFinance.com
By: Catalina Vielma

Opportunity Zones have officially become the industry’s buzz phrase for 2018. Since the passage of the Tax Cuts and Jobs Act, we have watched governors designate which census tracts they want to favor and listened as the states forecast the potential impact on their local economy. As I visit developers and housing finance agencies across the country, I continually hear this question: “It sounds great, but how do Opportunity Zones work with housing tax credits?”

> Link to Full Article on HousingFinance.com

As seen on: ROI-NJ.com
By: Tom Bergeron

In this ROI-NJ interview, Sills Cummis’ Ted Zangari and Jaime Reichardt share their insights on the recently enacted federal Opportunity Zone Program.

Ted Zangari, chair of the Redevelopment Law Practice Group at Sills Cummis & Gross P.C. in Newark, is one of the most prominent public incentives and real estate attorneys in the state. His law firm colleague Jaime Reichardt chairs the firm’s state and local tax practice and has advised clients on all sorts of complicated federal and state taxation issues.

> Link to Full Article on ROI-NJ.com

As seen on: Bisnow.com
By: Joseph Pimentel, Bisnow Los Angeles

In Downtown Long Beach, million-dollar homes, high-end condominiums and luxury apartments line Ocean Boulevard, just a few steps from the beach. The waterfront has high-rise hotels, towering office buildings and chic retail and restaurants. The city also has pockets of abject poverty.

> Link to Full Article on Bisnow.com

Opportunity Zones, created by Trump’s tax law, are meant to help the heartland thrive and make the country more equal—but can they pull it off?

As seen on: TheAtlantic.com
By: Annie Lowrey

FRESNO, Calif.—Census tract 06019000100 has a lot going for it. Locals cheer the melting-pot atmosphere, the arts scene, the nearby nature, and the affordable housing—affordable in national terms, which feels all the more amazing given that it is a quick drive both to the grandeur of Yosemite and to the tech hub of the Bay Area. Start your car up and grab a coffee here at 9 a.m., and you could be standing in downtown San Francisco or in front of Apple’s headquarters by noon.

> Link to Full Article on TheAtlantic.com

If you or your companies or clients are holding appreciated property of any kind, whether in the form of investments like stock, bonds, or a passive investment in a pass-through entity, or in the form of vacant land or a commercial or residential building, or other capital assets, there is a new opportunity to sell the property and defer and reduce the capital gain, while investing in a new business or property that could potentially be sold tax-free.

The Federal tax reform bill enacted earlier this year contains a new tax incentive aimed at directing capital and investment into America’s distressed areas. The new program is called the Opportunity Zone program.

Continue Reading A New Opportunity for Deferring and Reducing Capital Gains While Making Attractive Investments in America’s Distressed Areas

Late last week, the governors of New York and Pennsylvania submitted their selections for opportunity zone designations to the U.S. Department of Treasury. Those nominations are expected to be approved by Treasury to take advantage of the new federal tax incentive program. The federal Opportunity Zone program is a new tax incentive designed to direct investor capital into various low-income and distressed areas around the country. The program affords investors the opportunity to defer and reduce capital gains that are invested in opportunity funds. In addition, an investor who holds an interest in an opportunity fund for 10 years or more does not pay any tax on the gain when the opportunity fund investment is sold or transferred. Additional details can be found in an earlier article we published here.

A listing of New York’s 514 zone nominations can be found here.

A listing of Pennsylvania’s 300 zone nominations can be found here.

We will continue to keep you updated as more details emerge on this transformative program, including expected guidance from the Internal Revenue Service regarding qualified opportunity fund certification and qualified opportunity zone property.

The U.S. Department of Treasury’s Community Development Financial Institutions Fund has just released the list of New Jersey’s approved Opportunity Zones. The Opportunity Zones are identified by specific census tracts provided below.

The federal Opportunity Zone program is a new tax incentive designed to direct investor capital into various low-income and distressed areas around the country. On March 21, Governor Murphy submitted New Jersey’s list of eligible census tracts seeking Opportunity Zone designation.

Continue Reading New Jersey “Opportunity Zones” Just Revealed