Opportunity Zone Rules Released

Is this a more rehearsed version? Any Major changes? I see that it has more rules on how the 90% is measured.

Huge question answered right here basically the 10 years step up basis is available up until June 2027. The 10/15% reduction is the only thing that is ticking Jan 2019

Section 1400Z-2 does not contain specific statutory language like that in some other provisions, such as the D.C. enterprise zones provision in section 1400B(b)(5), that expressly permits a taxpayer to satisfy the requisite holding period after the termination of the designation of a zone. Commenters have raised the question described in the preceding paragraph—whether a taxpayer whose investment in a QOF has its 10-year anniversary after the 2028 calendar year will be able to take advantage of the basis step-up election provided in section 1400Z-2(c). The incentive provided by this benefit is integral to the primary purpose of the provision (see H.R. Rept. 115-466, 537, which describes the intent to attract an influx of capital to designated low income communities). For this reason, the proposed regulations permit taxpayers to make the basis step-up election under section 1400Z-2(c) after a qualified opportunity zone designation expires. 18 The ability to make this election is preserved under these proposed regulations until December 31, 2047, 20½ years after the latest date that an eligible taxpayer may properly make an investment that is part of an election to defer gain under section 1400Z-2(a). Because the latest gain subject to deferral would be at the end of 2026, the last day of the 180-day period for that gain would be in late June 2027. A taxpayer deferring such a gain would achieve a 10-year holding period in a QOF investment only in late June 2037. Thus, this proposed rule would permit an investor in a QOF that makes an investment as late as the end of June 2027 to hold the investment in the QOF for the entire 10-year holding period described in section 1400Z-2(c), plus another 10 years. The additional ten year

Has anyone built an OZ post tax IRR model? I'm building one for my fund as we explore and am thinking the only way to do this is to use a 3 statement model (the deals are all MF), but wondering if others have done them? I'm thinking the only way to track the tax savings is in a seperate IRR table since tax savings are nowhere to be tracked on the BS?

you're also depreciating your maintenance capex too right the reserves in your cash flows, since those are long-term expense items? This is how I do it in 3 statement models so thought it's easier, but just wondering what others are doing.

Yeah you guys right just added the dep and int expense to the NOI, added back reserves since that's an above the line treatment.

Question, do you get any benefit from investing in an OZ, like doing a development in an OZ without using your capital gains? The income produced during the holding period doesn't have any deferred benefit in the OZ correct, that is taxed as normal income tax at the equity tax rate?

Also what is your tax basis for the LP who is absorbing majority of the pre-tax expenses, my understanding is the LP is guaranteeying the debt their basis is the full value of the debt and not just their invested equity?