July 9, 2020

Volume X, Number 191

July 08, 2020

Subscribe to Latest Legal News and Analysis

July 07, 2020

Subscribe to Latest Legal News and Analysis

July 06, 2020

Subscribe to Latest Legal News and Analysis

Highly Anticipated Qualified Opportunity Zone Proposed Treasury Regulations Released

On Wednesday, April 17, the United States Department of the Treasury released proposed regulations related to investment in Qualified Opportunity Zones and Qualified Opportunity Funds. The issuance of these highly anticipated regulations and related guidance will provide critical information to investors, Qualified Opportunity Funds, and project sponsors/operators involved in real estate, venture capital, operating business, and project finance in Qualified Opportunity Zones. Of particular importance in this release is guidance relating to the qualification criteria for operating businesses and venture capital. The release also provides further clarity in the qualification criteria for real estate development projects. Greenberg Traurig has broad experience working with clients in fund formation and investor utilization, along with sponsor, developer, and operator project qualification under this new tax incentive program.

Highlights of the proposed regulations include:

  • Investor special elections for sales of assets when investment in QOF is longer than 10 years
  • REIT asset transfers
  • Treatment of debt-financed distributions
  • “Operating Business” rules, including gross income test and intangibles test clarification
  • “Original Use” clarification for tangible property
  • Substantial improvement test among multiple assets
  • Treatment of gain from interim sales of assets when an investment in a QOF is held fewer than 10 years
  • “Active” trade or business requirement
  • Transfers upon death
  • Treatment of special allocations (carried interest)
  • “Substantially all” test clarification
  • Treatment of Leased Property (related and unrelated party lease treatment)
  • Working Capital Safe Harbor 31 Month Treatment
  • 90% Semi-Annual Testing for QOF proceeds raised in prior six months

We will be releasing a detailed analysis and offering webinars in the near future describing the impact of these new regulations.

Please find the link to the published proposed regulations here.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume IX, Number 108


About this Author

James Lang, Greenberg Traurig Law Firm, Tax and Energy Law Attorney

James O. Lang focuses his tax and corporate project finance practice on tax credit incentive programs and related state and federal incentive programs.  Jim represents investors, lenders, community development entities, and for-profit and not-for-profit projects in complex transactions where capital stacks require enhancement through incentive financing, including state and federal new markets tax credits, affordable housing and low-income housing tax credits, historic rehabilitation tax credits, renewable energy tax credits, and film and entertainment tax credits. 

Sanford Presant, Greenberg Traurig Law Firm, Los Angeles, Corporate, Real Estate and Tax Law Attorney

Sanford C. Presant, Chair of the firm's Real Estate Fund Practice, focuses his practice on providing fund and joint venture best practice business and tax structuring advice to sponsors of the leading real estate private equity funds, REITs, and their local partners and investors in the U.S. and internationally.

Sandy has more than 30 years of experience as a tax and business lawyer for major funds and real estate companies. He has structured and negotiated the tax and business aspects for over 100 real estate funds (including their internal general partner structuring and executive compensation) in the U.S., Europe, Latin America and Asia, and more than 500 joint ventures (partnerships and LLCs) as both a corporate and tax attorney. Sandy is a well-known author and frequent lecturer on these topics as well. Sandy was the National Co Chair - Real Estate Fund Services at Ernst & Young from 2000 - 2005 and was Chair of DLA Piper’s Real Estate Fund Practice.

Robert Maples, Greenberg Traurig Law Firm, Northern Virginia, Washington DC, Government Policy

Robert Y. Maples is experienced in the Washington, D.C. federal, state and public affairs arenas. He has also been an advocate for building pragmatic alliances to resolve major social issues and has pioneered strategies for addressing complex public affairs crises in collaborative versus confrontational contexts. He continues his advocacy of pragmatic alliances in furtherance of client/government collaborations among the Congress and federal agencies, and serves as state counsel on complex client public policy matters. He is experienced in complex problem solving in...