Due to the worldwide COVID-19 pandemic, in June 2020 the IRS provided taxpayers additional time to invest in Qualified Opportunity Zone Funds through the end of 2020. Since the original deadline has passed and the pandemic is still ongoing, the IRS has again provided additional relief for Opportunity Zone Fund investors.
Usually, a taxpayer would have 180 days after a capital gain is realized to invest in a Qualified Opportunity Zone Fund. However, with this additional relief if the end of the 180-day investment period falls on or after April 1, 2020 and before March 31, 2021, the last day of the investment period is automatically postponed to March 31, 2021. The IRS effectively provided an additional 3 months to invest with this extension.
A few examples of who this affects are:
- A business owner who sold their business on or after October 5, 2019 where some of the gain was a capital gain.
- An investor who received a 2019 K-1 that reported capital gain.
- An individual who sold stock on or after October 5, 2019, which includes the period of large selloffs in February and March 2020.
This means that investors who fall in that investment period who did not complete an investment before the end of 2020 now have an additional 3 months to invest in an Opportunity Zone Fund and defer capital gains.
“We are excited for this because it should hopefully drive more investment in CTAF, which could lead to additional investment in our other funds.”
– Scott Mills, CPA Director of Tax, Caliber
To learn more, view the IRS release here.