OZ Pitch Day - March 7, 2024
The IRS recently confirmed the boundaries of the Opportunity Zones were established at the time they were designated and not subject to change due to the 2020 Census. The OZ marketplace had eagerly awaited guidance on this critical issue.
The IRS Announcement 2021-10 stated, “Accordingly, boundaries of a Designated QOZ do not shrink or expand if the 2020 decennial census results in a change to the boundaries of a census tract. Similarly, if the 2020 decennial census results in a change to a 2010 census tract number…, the 2010 census tract number continues to apply for purposes of identifying the Designated QOZ.”
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Proposed Opportunity Zone Regulations Provide Helpful Guidance in Two Key Areas
Recently, the United States Department of Treasury and Internal Revenue Service provided helpful and practical guidance in the form of two proposed regulations for Opportunity Zones. The first addressed the proper application of the so-called “Working Capital Safe Harbor,” particularly considering the massive changes businesses have faced from the COVID pandemic.
Proposed regulations would provide flexible rules, including a time period within which to revise or entirely replace the original written plan for projects located in an Opportunity Zone affected by a federally declared disaster (including COVID).
The second area of guidance addressed foreign investors. The proposed regulations would offer a procedure by which foreign taxpayers can avoid FIRPTA withholding and thus have the full transaction proceeds available to reinvest eligible gains into a Qualified Opportunity Zone.
Jill Homan and Jay Darby analyze these new proposed regulations in a new article here.
Duval & Stachenfeld Publish Comprehensive Working Capital Safe Harbor Report
Speaking of Working Capital Safe Harbor, Duval & Stachenfeld Tax Practice Chair Jessica Millett explains in detail its importance and how a real estate QOZB can navigate the OZ rules. The WCSH unlocks a number of secondary safe harbors that help new QOZBs get their businesses up and running, so an understanding of how the WCSH operates is crucial for every opportunity zone project.
$1 Million Investment from Erie Insurance Brings Growth to Opportunity Zone Business
Founded in 2014, Erie-based Data Inventions just received a $1 million investment from Erie Insurance Opportunity Zone Fund. Erie Insurance, which created a $50 million Opportunity Zone Fund in 2019, has announced more than $35 million worth of investments, including $6.5 million in the Erie Downtown Development Corp.
Data Inventions plans to use the money to expand their team of nine employees, and is expected to be close to 30 by the end of the year. “The money we just received is now going into investing in and growing the business,” said Duane Clement, Founder of Data Inventions. They will also use it to look for a new and larger space for their business.