The adoption of the Tax Cuts and Jobs Act in December 2017 established the “opportunity zone” program to provide tax incentives for long-term investing in designated economically distressed communities. The program allows taxpayers to defer and reduce taxes on capital gains by reinvesting gains in “qualified opportunity funds” that are required to have at least 90 percent of their assets in designated low-income zones.
Interests in a qualified opportunity fund offered and sold to investors will typically constitute securities within the meaning of federal and state laws except in limited circumstances. As a result, such qualified opportunity funds must comply with all applicable regulations of the SEC and the securities regulators in the states where they are doing business, in addition to other applicable regulations, such as those of the Internal Revenue Service and Treasury Department.
