United States

IRS extends the timeline to invest in Qualified Opportunity Funds

TAX ALERT  | 

IRS Extends 180-Day Period to Invest in a Qualified Opportunity Fund

Notice 2020-23 automatically extends the timeline for investing in a Qualified Opportunity Fund (QOF) in light of the COVID-19 public health emergency. Generally, a taxpayer that has an eligible capital gain has a 180-day period from the date of the transaction to invest the eligible gain into a QOF in order to recognize the deferral benefits of the qualified opportunity zone program. 

The Notice provides that any deadline that would have fallen between April 1 and July 14, 2020, is automatically extended to July 15, 2020. This is accomplished by classifying the investment in a QOF pursuant to section1400Z-2(a)(1)(A) as a “Specified Time-Sensitive Action” as described in the Notice. For example, a taxpayer has an eligible gain from a transaction that occurred in October 2019 and the 180-day period would normally end on April 15, 2020, requiring a qualified investment in a QOF by that date. Under Notice 2020-23, the taxpayer would now have until July 15, 2020 to make the qualified investment in a QOF. This extension will undoubtedly be welcome relief for taxpayers planning QOF investments, and answers the concerns raised by many taxpayers in the recent weeks. 

Multiple other payment deadlines and filing extensions were extended under Notice 2020-23 as well, please see Overview of relief provided by Notice 2020-23 for more information.

AUTHORS