3025 North Wooster Avenue
Dover, Ohio 44622
March 9, 2018
Mr. Scott Dinwiddie
Associate Chief Counsel
Income Tax & Accounting
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224
RE Recommendations for
Guidance on Opportunity Zones

Dear Mr. Dinwiddie:

On behalf of the members of the Novogradac Opportunity Zones Working Group (the Working Group), we
are requesting immediate guidance on various provisions of Internal Revenue Code Section 1400Z-2: Special rules for capital gains invested in opportunity zones by Pub. L No. 115-97. We believe that our guidance recommendations will: help to expedite the implementation of the Opportunity Zones program by the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS); and, provide investors with the information and tools necessary to make informed decisions regarding investment in economically distressed communities. The guidance requested is listed in order of importance to a successful implementation of the Opportunity Zones program, and included as an attachment to this letter. In particular, there are four areas of main concern.

1. Guidance is needed whether a taxpayer can benefit from the 10 year holding period election to increase investment basis to fair market value when opportunity fund property is sold before a taxpayer sells his/her investment.

2. Guidance is needed on the definition of the “active conduct” of a business for purposes of a qualified
opportunity zone business.

3. Guidance is needed on whether an established low-income community business can qualify as a qualified opportunity zone business.

4. Guidance is needed on the meaning of “sale or exchange” for the purpose of the end of the deferral period. The members of the Working Group are participants in the community development finance field, including investors, lenders, for-profit and nonprofit developers, community development financial institutions, community development entities, and other related professionals. These stakeholders are working together to suggest consensus solutions to technical Opportunity Zone program issues and provide recommendations to make the Opportunity Zones program more efficient in delivering benefits to low-income communities.

Mr. Scott Dinwiddie
US Department of Treasury
March 9, 2018

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We appreciate your consideration of these comments and look forward to the opportunity to discuss these issues further in our meeting scheduled for March 13 at 11:00.

Yours very truly,
Novogradac and Company LLP
By John S. Sciarretti, CPA Partner

CC: Julie Hanlon-Bolton, ITA, IRS
Michael Novey, Office of Tax Policy, Treasury

Attachments: Recommendations for Guidance on the Opportunity Zones