Qualified Opportunity Zones : Death, Taxes, and Other Uncertainties

The Tax Cuts and Jobs Act of 2017 created substantial new federal tax benefits for taxpayers with capital gain, if they make certain investments in so-called "qualified opportunity zones" (QO Zones). The QO Zone tax benefits generally include permanent tax exemption of up to 15% of the recognized gain and tax deferral of the remaining gain until 2026. In addition, the taxpayer's gain from selling its QO Zone investments after 10 years is entirely exempt from tax.Despite Benjamin Franklin's quip that two things are certain in life, death and taxes, there is less certainty about death and taxes in the context of QO Zones. This article discusses the issues that may arise with the death of the investor, as well as the interactions of the QO Zone provisions with other tax benefits, such as the new markets tax credit, the low income housing tax credit, the historic rehabilitation tax credit, the 20% pass-through business income deduction, or all of the above