Rule2021-16664
Investing in Qualified Opportunity Funds; Correction
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 5, 2021
Effective
August 5, 2021
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document contains corrections to Treasury Decision 9889, which was published in the Federal Register on Monday, January 13, 2020. Treasury Decision 9889 contained final regulations under the Internal Revenue Code (Code) that govern the extent to which taxpayers may elect the Federal income tax benefits with respect to certain equity interests in a qualified opportunity fund (QOF).
Full Text
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<title>Federal Register, Volume 86 Issue 148 (Thursday, August 5, 2021)</title>
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[Federal Register Volume 86, Number 148 (Thursday, August 5, 2021)]
[Rules and Regulations]
[Pages 42715-42716]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-16664]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9889]
RIN 1545-BO4
Investing in Qualified Opportunity Funds; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations; correction.
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SUMMARY: This document contains corrections to Treasury Decision 9889,
which was published in the Federal Register on Monday, January 13,
2020. Treasury Decision 9889 contained final regulations under the
Internal Revenue Code (Code) that govern the extent to which taxpayers
may elect the Federal income tax benefits with respect to certain
equity interests in a qualified opportunity fund (QOF).
DATES: These corrections are effective on August 5, 2021 and applicable
on or after January 13, 2020.
FOR FURTHER INFORMATION CONTACT: Concerning section 1400Z-2 and these
regulations generally, Harith J. Razaa, (202) 317-7006, or Kyle C.
Griffin, (202) 317-4718, of the Office of Associate Chief Counsel
(Income Tax and Accounting). These numbers are not toll-free numbers.
SUPPLEMENTARY INFORMATION:
Background
The final regulations (TD 9889) that are the subject of this
correction are under section 1400Z-2 of the Code.
Need for Correction
As published on January 13, 2020 (85 FR 1866) the final regulations
(TD 9889) contain errors that need to be corrected.
Correction of Publication
Accordingly, the final regulations (TD 9889) that are the subject
of FR Doc. 2019-27846, appearing on page 1866 in the Federal Register
of January 13, 2020, are corrected as follows:
1. On page 1897, second and third columns, removing the fourth
through the sixth sentences of the last paragraph.
2. On page 1923, first column, the first full paragraph is
corrected to read: ``As set forth in the final regulations, the 62-
month working capital safe harbor provides that, during the maximum 62-
month covered period, (1) NQFP in excess of the five-percent NQFP
limitation will not cause a trade or business to fail to qualify as a
qualified opportunity zone business, and (2) gross income earned from
the trade or business will be counted towards satisfying the 50-percent
gross income requirement (each of clauses (1) and (2) function in a
manner similar to the 31-month working capital safe harbor). In
addition, the regulations provide additional flexibility for entities
utilizing the working capital safe harbor. First, for start-up
entities, the 62-month working capital safe harbor provides that,
during the maximum 62-month covered period, if property of an entity
that would otherwise be NQFP is treated as being a reasonable amount of
working capital under the safe harbor, the entity satisfies the
requirements of section 1400Z-2(d)(3)(A)(i) only during the working
capital safe harbor period(s) with regard to such property. However,
the final regulations make clear that such property is not and will
never be qualified opportunity zone business property for any purpose.
Second, for any eligible entity utilizing the working capital safe
harbor, if tangible property is expected to be qualified opportunity
zone business property pursuant to the written plan, such tangible
property is treated as qualified opportunity zone business during the
working capital safe harbor test for purposes of section 1400Z-2(d)(3).
Under the 62-month working capital safe harbor, intangible property
purchased or licensed with working capital covered by the safe harbor,
and pursuant to the plan submitted with respect to that safe harbor,
will count towards the satisfaction of the 40-percent intangible
property use test.''
3. On page 1926, third column, the second sentence of the first
full paragraph, the language ``In general, the final regulations permit
a qualified opportunity zone business to treat tangible property for
which working capital covered by the 31-month working capital safe
harbor is expended as (i) used in the trade or business of the
qualified opportunity zone business, and (ii) qualified opportunity
zone business property throughout the period during which such working
capital is covered by the safe harbor.'' is corrected to read ``In
general, the 62-month working capital safe harbor under the final
regulations provides that, during the maximum 62-month covered period,
if property of a start-up entity that would otherwise be NQFP is
treated as being a reasonable amount of working capital under the safe
harbor, the start-up entity satisfies the requirements of section
1400Z-2(d)(3)(A)(i) only during the working capital safe harbor
period(s) with regard to such property. However, the final regulations
make clear that such property is not qualified opportunity zone
business property for any other purpose. See part V.N.3.c of this
Summary of Comments and Explanation of Revisions describing the 62-
month working capital safe harbor set forth in Sec. 1.1400Z2(d)-
1(d)(3)(vi).''.
4. On page 1926, third column, the first through the sixth line
from the bottom of the first full paragraph, the language ``capital
covered by the 31-month working capital safe harbor are not, following
the conclusion of the final safe harbor period, treated as tangible
property for purposes of applying the 70-percent tangible property
standard.'' is corrected to read ``capital covered by the 62-month
working capital safe harbor are not, following the conclusion of the
final safe harbor period, treated as qualified opportunity zone
business property for purposes of applying the 70-percent tangible
property standard. Because working capital is not tangible property,
working capital covered by the 62-month safe harbor cannot be treated
as qualified opportunity zone business
[[Page 42716]]
property under the proposed regulations or the final regulations except
as provided in section 1.1400Z2(d)-1(d)(3)(vi)(D).''.
Oluwafunmilayo P. Taylor,
Federal Register Liaison, Publications and Regulations Branch, Legal
Processing Division, Associate Chief Counsel (Procedure and
Administration).
[FR Doc. 2021-16664 Filed 8-4-21; 8:45 am]
BILLING CODE 4830-01-P
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