2021 OZ Deadline Extensions

January 20, 2021

The IRS recently issued Notice 2021-10, which automatically extends several deadlines that had previously been extended under Notice 2020-39 issued on June 4, 2020 and Notice 2020-23 issued on April 9, 2020.

Perhaps most notably, the new notice extends the 180-day investment period for many investors to March 31, 2021. Last year’s Notice 2020-39 had granted an extension to December 31, 2020.

Now, for any 180-day period that ends on or after April 1, 2020 and before March 31, 2021, the deadline is automatically extended to March 31, 2021.  Effectively, this means that a gain recognized by an individual on or after October 4, 2019 and before October 2, 2020, there is no 180-day period but rather a single deadline of March 31, 2021 for the gain to be invested in a Qualified Opportunity Fund.

For taxpayers using gain reported on a partnership Schedule K-1, the new March 31, 2021 deadline applies to any gain recognized by the partnership on or after January 1, 2019. Normally, a taxpayer using gain reported on a K-1 can elect to begin the 180-day period on the due date of the passthrough entity’s tax return (not including extensions). For 2019 partnership returns, this due date was March 15, 2020. The end of the 180-day period that began on March 15, 2020 is September 11, 2020, a date which falls into the window that is now eligible for extension to March 31, 2021 under this new notice.  Other deadline relief granted by this notice include:

  • 30-month substantial improvement period
  • QOF 90% asset test
  • QOZB working capital safe harbor
  • QOF 12-month reinvestment period

 

This is good news for investors hoping to still make a 2021 QOF investment!

Ashley Dillard, CCIM

Senior Director

Ashley has an extensive knowledge of the Chicago commercial real estate market. After graduating from University of Kansas with a degree in architectural studies, she worked in Kansas City as a commercial leasing agent at a 2.1 million square foot office park. While working for an institutional owner, she learned valuable skills such as client reporting, communication and accountability.

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Opportunity Zones By The Numbers

8,764 CENSUS TRACTS

The total number of census tracts certified as Opportunity Zones by the U.S. Treasury.

$6.1 TRILLION

Potential unrealized capital gains eligible for Qualified Opportunity Fund investment and tax treatment.

$100 BILLION

Treasury Secretary Steven Mnuchin’s estimate of private capital that will flow into Opportunity Zones.