Treasury Sheds More Light on Opportunity Zone Rules

April 24, 2019

Treasury Sheds More Light on Opportunity Zone Rules

April 18, 2019 | Erika Morphy | GlobeSt.com

The Treasury Department has released another round of proposed regulations clarifying how Opportunity Zone investments and developments will work. Like earlier rounds, these new rules appear to be generally favorable to the commercial real estate industry.

At 169 pages, Treasury covered a lot of ground in this release. One important topic that was addressed was the question of what activities would meet the act of conduct requirement of a business, Jonathan W. Giokas, a partner with Husch Blackwell, tells GlobeSt.com. “One key test for Opportunity Zone investments is that an investor has to be engaged in an active conduct of business,” he says. “In this new set of proposed rules it was determined that leasing can meet the act of conduct requirement for a business.”

Another important measure, Giokas continues, is that the IRS provided safe harbors that help determine how a business can meet the gross income requirement in the Opportunity Zone program. “Those are based on the provision of services and the employment of workers.”

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