The Treasury Department issued a second set of Proposed Regulations on April 17, 2019, addressing open issues and providing further guidance on the Opportunity Zone program.  This second round of regulations responds to stakeholder comments and concerns by clarifying key issues that remained ambiguous under prior guidance.  By providing further clarity, the new Proposed Regulations are intended to encourage investment in Opportunity Zones while also cautioning investors that anti-abuse oversight is forthcoming.

This new batch of Proposed Regulations are investor friendly and address several key issues including providing guidance on:

  • The "original use" requirement for Opportunity Zone property.
  • Limits on the acceptable use of property by Opportunity Zone businesses both inside and outside of Opportunity Zones.
  • The ability of Opportunity Funds to sell investments, reinvest or distribute proceeds and the effect of Opportunity Fund-level transactions on investors.
  • The application of the working capital safe harbor for Opportunity Zone businesses.
  • Limited relief from the Opportunity Fund asset qualification test (i.e., the 90% test).

Treasury's latest guidance is a welcome development for the Opportunity Zone program.  Based on the explanations published with the Proposed Regulations, investors can expect future guidance to address remaining administrative ambiguities and establish anti-abuse rules for Opportunity Fund investments.

McLaughlinQuinn LLC's tax planning practice currently represents clients in connection with the organization and administration of Opportunity Funds throughout New England.  This latest round of Proposed Regulations provides needed guidance to a rapidly growing time-limited tax incentive program.  For more information on the Opportunity Zone program, its tax benefits and the impact of this latest round of Proposed Regulations, join Cory J. Bilodeau, Esq., Partner, at an Opportunity Zone seminar sponsored by the Boston Tax Institute on June 6, 2019 in Waltham, Massachusetts and August 22, 2019 in Portland, Maine.

Additional information on the Opportunity Zone seminars and registration information is available at