IRS Extends Due Dates for Opportunity Zone Investments & Funds
The IRS recently extended some key dates for Opportunity Zone investments and key tests related to Qualified Opportunity Funds (QOF). In Notice 2021-10, the IRS provides additional relief to QOFs and their investors in response to the COVID-19 pandemic. Notice 2021-10 extends the relief previously granted in Notice 2020-39.
Here are key dates that were extended for QOFs and investors:
- If the 180-day reinvestment window falls on or after April 1, 2020, and before March 31, 2021, the reinvestment date is postponed until March 31, 2021—a welcome three-month extension of time for investors to reinvest.
- For existing assets purchased by a QOF or a qualified Opportunity Zone business (QOZB), the period starting on April 1, 2020, and ending on March 31, 2021, is disregarded when determining the 30-month substantial improvement period. Again, this is a three-month extension that helps a QOF or QOZB meet the substantial improvement test.
- QOFs are provided an automatic reasonable cause exception to meet the 90 percent investment standard if the last day of the first six-month period of the tax year, or the last day of the tax year, falls within the period starting on April 1, 2020, and ending on June 30, 2021.
- A QOZB relying on the working capital safe harbor receives an additional 24 months, for a total of 55 months, to meet the safe harbor. Startup businesses receive an additional 24 months, for a total of 86 months, to meet the safe harbor.
- If a QOF’s reinvestment period includes June 30, 2020, the QOF receives an additional 12 months to reinvest a return of capital or a sale of QOF qualified property. Because this also includes relief provided under Notice 2020-39, the maximum reinvestment period adds up to a total of 24 months under both IRS notices.
The IRS extensions provided in Notice 2021-10 grant welcome relief to many QOFs and QOZBs facing delays and challenges related to the pandemic. Use the additional time wisely.
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