The Law of Tax-Exempt Organizations, 2021 Cumulative Supplement. Bruce R. Hopkins

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СКАЧАТЬ rules for exempt hospitals^527.2 and a state college or university's (with dual status) liability for the excise tax on excess compensation.^527.3

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§ 7.17 QUALIFIED OPPORTUNITY ZONES

Qualified opportunity zones are designed to spur economic development and job creation in distressed communities throughout the nation and U.S. possessions by providing tax benefits to investors who invest capital into these communities. Taxpayers may defer tax on eligible capital gains by making an appropriate investment in a Qualified Opportunity Fund and meeting other requirements.⁵⁷²

A qualified opportunity zone is a population census tract that is a low‐income community that is designated as such a zone.⁵⁷³ The requisite designation occurs when the chief executive officer of the state in which the tract is located nominates the tract for the designation and the IRS certifies the nomination and designates the tract as an opportunity zone.⁵⁷⁴

Two principal tax incentives encourage investment in qualified opportunity zones. Deferral of inclusion in gross income for certain gains is provided to the extent the corresponding amounts are invested in a qualified opportunity fund.⁵⁷⁵ There is an exclusion from gross income of the post‐acquisition gains on investments in these funds that are held for at least 10 years.⁵⁷⁶

A qualified opportunity fund is an investment vehicle that is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property that holds at least 90 percent of its assets in qualified opportunity zone property.⁵⁷⁷ Qualified opportunity zone property is property that is qualified opportunity zone stock, a qualified opportunity zone partnership interest, or qualified opportunity zone business property.⁵⁷⁸

Although these opportunity zones are not necessarily discrete areas of charitable activity, “it is clear that philanthropies have a critical role in helping cities realize the full economic and social impact” of the zones.⁵⁷⁹ This commentator enumerated the ways charitable organizations can play important roles in advancing this program: gather everyone with a stake in improving a poor neighborhood, map out a region's assets, build markets, empower local residents, bolster institutions, encourage innovation, and share information. He noted that this opportunity zone tax incentive has the potential to channel private capital to communities that have “suffered from neglect by financial institutions and government” but added that this “potential will be realized only if philanthropies and other players help shape this new incentive so that it provides at least as much benefit to the public as it provides in private gain—if not more.”⁵⁸⁰

Notes

      1 ⁴⁴ IRS Tax Exempt and Government Entities Division, Disaster Relief: Providing Assistance Through Charitable Organizations (Pub. 3833 (rev. 2014)).

      2 ⁴⁵ In a summary of the federal tax law concerning international grantmaking by charitable organizations, the IRS suggested that, to be an eligible recipient of financial assistance in the disaster relief context, an individual must be “needy”; the word distressed was not used (Chief Couns. Adv. Mem. 200504031).

      3 ⁴⁶ See § 7.11.

      4 ⁴⁷ See § 7.7.

      5 ⁴⁸ See § 12.3.

      6 ⁴⁹ See § 11.8.

      7 ⁵⁰ See § 11.8(b), text accompanied by note 79.

      8 ^50.1 Notice 2006‐109, 2006‐51 I.R.B. 1121.

      9 ^50.2 The selection committee is considered independent if a majority of its members consists of individuals who are not in a position to exercise substantial influence over the employer's affairs.

      10 ^50.3 IRC § 139.

      11 ^50.4 The publication states that employer‐sponsored private foundations can only make payments to employees or their family members affected by qualified disasters, not in nonqualified disasters or in emergency hardship situations.

      12 ^50.5 See § 5.8(d).

      13 ^50.6 These payments are not taxable compensation to the employees (IRC § 139(a)).

      14 ^50.7 Priv. Ltr. Rul. 200634016.

      15 ^50.8 Priv. Ltr. Rul. 200839034

      16 ^50.9 Priv. Ltr. Rul. 200926033.

      17 ^116.1 IRC § 170(b)(1)(A)(iii).

      18 ^321.1 Priv. Ltr. Rul. 201906010.

      19 ^131.2 Priv. Ltr. Rul. 201843016.

      20 ^131.3 Priv. Ltr. Rul. 201327014.

      21 ^321.4 See § 24.5(q).

      22 ^321.5 See § 14.1(g).

      23 ^497.1 See § 7.14(a).

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