On January 20, 2021, the Treasury Department published Notice 2021-10, extending COVID-19 relief for qualified opportunity funds (QOFs) and their investors. The new guidance generally extends the relief already in effect pursuant to Notice 2020-39. The previous relief, which expired on December 31, 2020, was retroactively extended. In particular, as a result of the extension:
- The deadlines for 180-day rollover windows that would have expired after April 1, 2020, are now extended to March 31, 2021.
- The 30-month deadline for substantial improvement is now tolled through March 31, 2021.
- Automatic reasonable cause relief for QOF asset test failures now extends to the June 30, 2021, asset test.
- The ability of qualified opportunity zone business (QOZB) to fund a 55-month working capital plan (i.e., with the extra 24 months) was extended to apply to plans funded before June 30, 2021. In addition, it is clarified that the extension also applies to the up-to-62-month multi-stage plans for “start-up” QOZBs, for a total of up to 86 months.
- The extra 12 months for QOFs to reinvest capital (for a total of 24 months) was extended to apply if the original 12-month period included June 30, 2020 (e.g., gross proceeds received on that date must be redeployed before June 30, 2022, or treated as a bad asset).