Horizons Spring/Summer 2019

This working capital safe harbor was described in the proposed regulations and is a key factor in providing long-term flexibility for developing real estate projects. Real estate QOZB’s also do not have issues with the 50% test discussed above, since the tenants renting the property and the property itself would all be located inside the QOZ. There are many other outstanding questions that exist. Some examples include lack of clarity on the definition of a trade or business and if triple net leases would qualify as such, qualification of the acquisition of raw land as qualified property, and various issues relating to exiting a QOF or a QOF deferring gain from sales or exchanges of the tangible property throughout its life. Those working with opportunity zones are looking for the above questions to be addressed in the near future. Outlook for Next Decade The benefits and possibilities of the program to help bring economic growth to low- income communities across the country are continuing to attract lots of attention even with the many unanswered questions and there are many real estate investments already utilizing the program.

Many professional organizations have provided comments to the IRS to ask for guidance relating to the unanswered questions, including the AICPA, bar associations and various industry councils and coalitions. The IRS has also indicated the possibility of releasing two additional sets of regulations that will hopefully address many outstanding questions. Everyone involved in opportunity zones is clamoring for these regulations as soon as possible since the program has declining benefits as years pass, starting with the expiration of the exclusion of gain and ending with the eventual expiration of the ability to make new investments. However, the timeline for the release of guidance is not known and was likely delayed due to the recent federal government shutdown. A positive sign is the IRS held a hearing on Opportunity Zones on February 14, 2019. This brings hope that additional guidance will be coming soon, and with clarity will likely come additional use of the program that will help bring capital into low-income communities and provide economic growth.

REAL ESTATE SERVICES GROUP

RubinBrown has developed a strong reputation nationally as a leader in accounting and advisory services. Today, we provide specialized services to more than 2,000 real estate entities. For more information, visit www.RubinBrown.com/RealEstate

Bryan Keller, CPA, CGMA Partner-In-Charge Real Estate Services Group 314.290.3341 bryan.keller@rubinbrown.com

Tim Anderson, CPA Partner Real Estate Services Group 314.678.3545 tim.anderson@rubinbrown.com

David Herdlick, CPA Partner Real Estate Services Group 314.290.3383 dave.herdlick@rubinbrown.com

Spring/Summer 2019

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