Below are questions submitted by the audience during our webinar Window of Opportunity: The IRS Issues Initial Guidance on Qualified Opportunity Zone Rules. The webinar was on November 2, 2018. Here’s the presentation from the webinar and our whitepaper on the new regulations.
- If I am a partner of a partnership and want to use the gain on an individual transaction by the partnership in 2018, what information must I receive from the partnership and do I have until the end of June 2019 for my investment?
You are right, if you are going to elect to defer gain at the partner level, the 180-day period does not begin until the last day of the partnership taxable year in which the realization event occurred—which is the date on which the partner “recognizes” its allocable share of the gain absent a partnership-level election to defer. Given that (i) the gain occurred in 2018; and (ii) if the last day of the partnership taxable year is on December 31, 2018, you would have until the end of June 2019 to make the investment into a QOF.
As an alternative, you may elect to treat your own 180-day period as being the same as the partnership’s 180-day period (thus, it would begin on the date of the realization event in 2018). The regulations are silent as to what information the partner willing to make such an election must obtain from the partnership, but presumably you would want documentation that provides assurance as to the amount of the gain and that the partnership will characterize the gain as “capital” (as opposed to “ordinary”) on your K-1.