No election may be made under paragraph (1)-
Gain to which subsection (a)(1)(B) applies shall be included in income in the taxable year which includes the earlier of-
The amount of gain included in gross income under subsection (a)(1)(A) shall be the excess of-
Except as otherwise provided in this clause or subsection (c), the taxpayer's basis in the investment shall be zero.
The basis in the investment shall be increased by the amount of gain recognized by reason of subsection (a)(1)(B) with respect to such property.
In the case of any investment held for at least 5 years, the basis of such investment shall be increased by an amount equal to 10 percent of the amount of gain deferred by reason of subsection (a)(1)(A).
In the case of any investment held by the taxpayer for at least 7 years, in addition to any adjustment made under clause (iii), the basis of such property shall be increased by an amount equal to 5 percent of the amount of gain deferred by reason of subsection (a)(1)(A).
In the case of any investment held by the taxpayer for at least 10 years and with respect to which the taxpayer makes an election under this clause, the basis of such property shall be equal to the fair market value of such investment on the date that the investment is sold or exchanged.
For purposes of this section-
The term "qualified opportunity fund" means any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90 percent of its assets in qualified opportunity zone property, determined by the average of the percentage of qualified opportunity zone property held in the fund as measured-
The term "qualified opportunity zone property" means property which is-
A rule similar to the rule of section 1202(c)(3) shall apply for purposes of this paragraph.
The term "qualified opportunity zone partnership interest" means any capital or profits interest in a domestic partnership if-
The term "qualified opportunity zone business property" means tangible property used in a trade or business of the qualified opportunity fund if-
For purposes of subparagraph (A)(ii), property shall be treated as substantially improved by the qualified opportunity fund only if, during any 30-month period beginning after the date of acquisition of such property, additions to basis with respect to such property in the hands of the qualified opportunity fund exceed an amount equal to the adjusted basis of such property at the beginning of such 30-month period in the hands of the qualified opportunity fund.
For purposes of subparagraph (A)(i), the related person rule of section 179(d)(2) shall be applied pursuant to paragraph (8) of this subsection 1 in lieu of the application of such rule in section 179(d)(2)(A).
The term "qualified opportunity zone business" means a trade or business-
For purposes of subparagraph (A), tangible property that ceases to be a qualified opportunity zone business property shall continue to be treated as a qualified opportunity zone business property for the lesser of-
In the case of any investment in a qualified opportunity fund only a portion of which consists of investments of gain to which an election under subsection (a) is in effect-
For purposes of this section, persons are related to each other if such persons are described in section 267(b) or 707(b)(1), determined by substituting "20 percent" for "50 percent" each place it occurs in such sections.
In the case of a decedent, amounts recognized under this section shall, if not properly includible in the gross income of the decedent, be includible in gross income as provided by section 691.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including-
If a qualified opportunity fund fails to meet the 90-percent requirement of subsection (c)(1),2 the qualified opportunity fund shall pay a penalty for each month it fails to meet the requirement in an amount equal to the product of-
In the case that the qualified opportunity fund is a partnership, the penalty imposed by paragraph (1) shall be taken into account proportionately as part of the distributive share of each partner of the partnership.
No penalty shall be imposed under this subsection with respect to any failure if it is shown that such failure is due to reasonable cause.
1 So in original. This subsection does not contain a paragraph (8).
2 So in original. Probably should be "subsection (d)(1),".
26 U.S.C. § 1400Z-2
Added Pub. L. 115-97, title I, §13823(a), Dec. 22, 2017, 131 Stat. 2184.
EFFECTIVE DATESection effective on Dec. 22, 2017, see section 13823(d) of Pub. L. 115-97, set out as an Effective Date of 2017 Amendment note under sectionof this title.
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- The term "taxpayer" means any person subject to any internal revenue tax.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.