IRS Extends Certain Deadlines Related to 1031 Exchanges and Qualified Opportunity Zone Investments

Miles & Stockbridge P.C.
Contact

On April 9, 2020, the IRS issued Notice 2020-23 (the “Notice”), which extends additional tax deadlines to cover individuals, estates, corporations and others. The Notice also provides relief with respect to certain “Specified Time-Sensitive Actions” that are due to be performed on or after April 1, 2020, and before July 15, 2020. For purposes of the Notice, the term “Specified Time-Sensitive Action” includes certain deadlines for taxpayers to identify property and complete a 1031 exchange. It also includes the prescribed timing to make qualified opportunity zone investments.

1031 Identification and Exchange Deadlines

Section 1031 of the Code allows investors to defer paying capital gains taxes on investment property sales by reinvesting the proceeds into a similar investment property within a specified timeframe. After an investment property is sold, investors typically have 45 days to identify the replacement property and 180 days to complete a transaction. Pursuant to the Notice, for taxpayers that have a like-kind exchange currently in process:

  • If the 45-day identification period expires on or after April 1, 2020, and before July 15, 2020—the taxpayer may have until July 15, 2020, to complete the identification; or
  • If the 180-day exchange period expires on or after April 1, 2020, and before July 15, 2020—the taxpayer may have until July 15 2020, to complete the exchange (assuming the due date of the return (including extensions obtained) is not before July 15, 2020).

Qualified Opportunity Zone Investment Deadlines

The Tax Cuts and Jobs Act of 2017 established the program to stimulate economic development in distressed low-income communities by offering potentially significant tax benefits to investors that make long-term investments in these areas. Capital gains qualify for beneficial treatment under the law as long as they are invested within 180 days of the gain being realized.

Under the Notice, Taxpayers now have until July 15, 2020, to elect to invest capital gains into a qualified opportunity fund if the original 180-day period expired on or after April 1, 2020.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Miles & Stockbridge P.C.

Written by:

Miles & Stockbridge P.C.
Contact
more
less

PUBLISH YOUR CONTENT ON JD SUPRA NOW

  • Increased visibility
  • Actionable analytics
  • Ongoing guidance

Miles & Stockbridge P.C. on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide