July 11, 2020

Volume X, Number 193

July 10, 2020

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July 09, 2020

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COVID-19 Extensions for Section 1031 Exchanges and Opportunity Zone Funds

Due to COVID-19, certain deadlines have been extended for Section 1031 exchanges and Opportunity Zone Funds.

SECTION 1031 EXCHANGES

IRS Notice 2020-23 (the Notice) has extended two deadlines for Section 1031 exchanges. These deadlines are for the 45-day identification period in which the taxpayer must identify the replacement property and the 180-day exchange period in which the taxpayer must acquire the replacement property (or sell its relinquished property in the case of a reverse like-kind exchange).

If the deadline for either of these periods would ordinarily end after March 31, 2020, the deadline may be extended until July 15, 2020. This relief is automatic; a taxpayer does not need to file any special form to receive this extension.

OPPORTUNITY ZONE FUNDS

The Notice has similarly extended the 180-day investment period for making a qualifying investment in an Opportunity Zone Fund. If that 180-day period would ordinarily end after March 31, 2020, the period may be extended until July 15, 2020.

In addition, there is generally a 31-month safe harbor for working capital held by a qualified opportunity zone business. Regulations allow this period to be extended by 24 months if the business is located in an opportunity zone within a federally declared disaster area. The entire United States has been declared a federally declared disaster area, so the working capital safe harbor may be extended from 31 to 55 months for Opportunity Zone projects nationwide.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 106

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About this Author

Kate Krauss Corporate & Tax Attorney
Partner

Kate Kraus is a partner in the firm's Los Angeles office practicing in the firm's Corporate, Tax and Joint Ventures groups. Kate has extensive experience in tax planning and structuring for partnerships and their partners, including formations, financing transactions, acquisitions, restructurings, debt workouts, and liquidations. Kate's clients include real estate funds, private equity funds, hedge funds, Fortune 100 companies, mid market companies and high net worth individuals. Kate is also a leading authority on the new partnership audit rules that were enacted by the Bipartisan Budget...

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Paul V. Obico Tax & Joint Ventures Allen Matkins Leck Gamble Mallory & Natsis Los Angeles, CA
Partner

Paul Obico is a partner in the Los Angeles office of Allen Matkins. Paul has a breadth of experience advising clients on partnership, corporate, and other tax matters. Paul is involved in structuring, negotiating, and documenting complex business transactions. He has counseled clients on a variety of tax matters, such as entity formation, debt and equity financings, and corporate and partnership restructurings. In addition, Paul regularly provides advice on the federal, state, and local tax implications of acquiring, owning, developing, and disposing of real property and real estate investments.

Paul also has extensive experience in planning, forming, and implementing real estate joint ventures, limited liability companies, and partnerships. He has represented equity investors, financial institutions, developers, and others with respect to a broad range of real property types, including undeveloped land, hotels and resorts, commercial office, retail projects, shopping centers, mixed-use projects, and residential development. Paul's joint venture expertise includes matters relating to asset acquisition, capital contributions, management, and governance, the transfer of interests, partner disputes, and debt and equity restructuring.

Services 

  • Tax & Joint Ventures

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Jared C. Kassan Associate Tax group
Associate

Jared Kassan is an associate in the firm's Los Angeles office, practicing in the Tax group.

Jared advises clients on a broad range of federal, state, and local tax issues, including partnership taxation, 1031 exchanges, debt workouts, tenancies in common, California property tax, and California documentary transfer tax. He is often involved in transactions where tax planning and entity structuring are an important aspect of the deal. Jared has advised clients ranging from small developers to large multi-national corporations, crafting strategies and helping each meet their...

213-955-5596