According to Internal Revenue Service published definition, an Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if the state has nominated them for that designation. The Secretary of the United States Treasury, via his delegation of authority to the Internal Revenue Service, needs to certify that nomination. Added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017, they now cover parts of all 50 states, the District of Columbia, and five United States territories. Designed to spur economic development by providing tax benefits to investors, they are an excellent tool for investors seeking tax benefits. The law allows investors to defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of:

• The date the investment in a QOF is sold or exchanged, or
• December 31, 2026, because it expects QOF to spur economic development.†

If they hold the QOF investment for longer than five years, there is a 10% exclusion of the deferred gain. If held for more than seven years, the 10% becomes 15%. If held for at least ten years, the investor is eligible for an increase in the basis of the QOF investment, equal to its fair market value on the date that the QOF investment is sold or exchanged. For additional information, QOF investors should visit Treasury.gov and IRS.gov.