he Tax Cuts and Jobs Act added new provisions to encourage investment in economically depressed areas referred to as opportunity zones, but it left some questions unanswered. The IRS proposed regulations in October 18, hoping to address them.
The October proposed regulations made clear that gain from the sale of a Sec. 1231 asset is “treated as capital gain” and can thus be deferred upon reinvestment into a qualified opportunity fund (QOF). Sec. 1231 requires a netting process, however, and the netting process posed a problem.
The April proposed regulations directly address this question, providing that a taxpayer may not reinvest Sec. 1231 gain until the netting process has completed. Get the details here.