- August 06, 2020
- Lisa Varela
- Author's Bio
- Blog Posts
- 0 Comments
Deadlines Extended for Qualified Opportunity Funds and Investors
The IRS has announced various extensions of deadlines for qualified opportunity funds and their investors due to the Coronavirus pandemic.
180-Day Investment Period
Generally taxpayers
must reinvestment capital gain in a qualified opportunity fund (QOF)
within 180 days after the gain is realized from a sale or exchange.
Under the guidance, if the last day of the 180-day investment period
falls on or after April 1, 2020, and before December 31, 2020, the last
day of the investment period is automatically postponed to December 31,
2020.
90-Percent Investment Standard
The guidance also
provides that a QOF’s failure to hold 90 percent of its assets in
qualified opportunity zone property on any semi-annual testing date that
falls on or after April 1, 2020 and ends on or before December 31, 2020
is due to reasonable cause on account of the COVIS-19 pandemic.
Therefore, the failure to satisfy the 90-percent test does not affect an
entity’s status as a QOF or prevent an investment in the entity from
being a qualified investment. Penalties due to failure to satisfy the
90-percent investment standard during this period are waived.
30-month Substantial Improvement Period Tolled
The
30-month period during which property held by a QOF or qualified
opportunity zone business must be substantially improved is tolled
during the period beginning on April 1, 2020, and ending on December 31,
2020.
24-Month Extension of Working Capital Safe Harbor Spending Deadline
Qualified
opportunity zone businesses holding working capital intended to be
covered by the 31-month working capital safe harbor before December 31,
2020, receive up to an additional 24 months to spend the working on
qualifying property. This extension is allowed under the QOF regulations
on account of the prior declaration of a Federally declared disaster
relating to the pandemic effective on January 20, 2020.
12-Month Extension of Reinvestment Period for QOFs
Finally,
if any part of the 12-month period during which a QOF may reinvest
returns of capital and proceeds from the sale of qualified opportunity
property in other qualified opportunity zone property includes January
20, 2020, the reinvestment period is extended up to an additional 12
months. Again, this extension is allowed under the QOF regulations due
to the disaster declaration.
Notice 2020-23, I.R.B. 2020-18, 742 is modified.