September 22, 2019

September 20, 2019

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IRS Allows Self-Certification of Qualified Opportunity Funds

The IRS released Opportunity Zone FAQs on April 24 explaining that an eligible entity will be able to self-certify to become a Qualified Opportunity Fund (QOF) by filing a form (to be released this summer) with its timely filed (including extensions) federal income tax return for the taxable year.

The tax benefits of investing in Opportunity Zones are available only to the extent that eligible amounts are timely invested in a QOF. To be a QOF, an entity must be a corporation or partnership organized as an "investment vehicle" for the purpose of investing in qualified property within an Opportunity Zone that holds at least 90 percent of its assets in such property. (See our E-Alerts on the tax incentives available to investors in QOFs, the Opportunity Zone designation process, and the first wave of such designations in April 2018.)

This IRS Q&A establishes the simplified certification process that many investors and fund managers have been hoping for. Self-certification should result in a faster and less expensive process than the Treasury Community Development Financial Institutions Fund's certification process for community development entities in the New Markets Tax Credit Program. Just how simple this process will be, of course, depends on what is required in the actual form released by the IRS.

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Wendi Kotzen, Ballard Spahr Law Firm, Philadelphia, Tax Law Attorney
Partner

Wendi L. Kotzen is the Co-Practice Leader of Ballard Spahr's Tax Group. She advises clients on the taxation of all types of real estate transactions, has an extensive background in Pennsylvania and Philadelphia realty transfer tax planning, and advises clients on mergers and acquisitions. Ms. Kotzen is also experienced working with REITs; real estate partnerships (both for developers and investors); leasing transactions, including sale-leasebacks; Pennsylvania state tax incentives; and structuring like-kind exchanges (forward, reverse, and TIC exchanges).

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Linda Schakel, Ballard Spahr Law Firm, Washington DC, Tax Law Attorney
Partner

Linda B. Schakel served as an attorney adviser in the Office of Tax Policy of the U.S. Treasury (May 1995 to August 1997) after practicing with Ballard Spahr for nine years. At the Treasury Department, she had primary responsibility for tax legislative and regulatory projects in the areas of tax-exempt bonds, Low Income Housing Tax Credits, empowerment zones and enterprise communities, work-opportunity tax credits, and welfare-to-work tax credits. Ms. Schakel returned to Ballard Spahr after her work with the Treasury Department. Before law school, she taught gifted elementary-school students and teachers of gifted students at the University of South Florida and several universities in the Washington, D.C., area.

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Adam Wallwork, Ballard Spahr Law Firm, Washington DC, Finance Law Attorney
Associate

Adam S. Wallwork is in the firm's Public Finance Department where he has acted as bond counsel, underwriter's counsel, borrower's counsel, trustee's counsel, and counsel to banks providing credit enhancements for museums, universities, long-term care providers, and affordable housing developers across the country. His practice focuses on the range of federal, state, and local tax issues that arise for investors, sponsors, underwriters, and issuers in securitized and structured finance transactions.

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