Sec. 70421. Permanent renewal and enhancement of opportunity zones
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Section 1400Z-1(c)(2)(B) is amended by striking beginning on the date of the enactment of the Tax Cuts and Jobs Act and inserting beginning on the decennial determination date . Section 1400Z-1(c)(2) is amended by adding at the end the following new subparagraph: The term decennial determination date means— July 1, 2026, and each July 1 of the year that is 10 years after the preceding decennial determination date under this subparagraph. . Section 1400Z-1(b) is amended by striking paragraph (3).
Section 1400Z-1(d)(1) is amended— in paragraph (1)— by striking and subsection (b)(3) , and by inserting during any period after the number of population census tracts in a State that may be designated as qualified opportunity zones under this section , and in paragraph (2), by inserting during any period before the period at the end. Except as provided in subparagraph (B), the amendments made by this subsection shall take effect on the date of the enactment of this Act. The amendment made by paragraph
(3)shall take effect on December 31, 2026. Section 1400Z-1(c) is amended by striking all that precedes paragraph
(2)and inserting the following: For purposes of this section— The term low-income community means any population census tract if— such population census tract has a median family income that— in the case of a population census tract not located within a metropolitan area, does not exceed 70 percent of the statewide median family income, or in the case of a population census tract located within a metropolitan area, does not exceed 70 percent of the metropolitan area median family income, or such population census tract— has a poverty rate of at least 20 percent, and has a median family income that— in the case of a population census tract not located within a metropolitan area, does not exceed 125 percent of the statewide median family income, or in the case of a population census tract located within a metropolitan area, does not exceed 125 percent of the metropolitan area median family income. . Section 1400Z-1 is amended by striking subsection
(e)and by redesignating subsection
(f)as subsection (e). Section 1400Z-1(e), as redesignated by paragraph (2), is amended to read as follows: A designation as a qualified opportunity zone shall remain in effect for the period beginning on the applicable start date and ending on the day before the date that is 10 years after the applicable start date. For purposes of this section, the term applicable start date means, with respect to any qualified opportunity zone designated under this section, the January 1 following the date on which such qualified opportunity zone was certified and designated by the Secretary under subsection (b)(1)(B). . The amendments made by this subsection shall apply to areas designated under section 1400Z-1 of the Internal Revenue Code of 1986 after the date of the enactment of this Act. Section 1400Z-2(a)(2) is amended to read as follows: No election may be made under paragraph
(1)with respect to a sale or exchange if an election previously made with respect to such sale or exchange is in effect. . Section 1400Z-2(b) is amended to read as follows: Gain to which subsection (a)(1)(B) applies shall be included in gross income in the taxable year which includes the earlier of— the date on which such investment is sold or exchanged, or the date which is 5 years after the date the investment in the qualified opportunity fund was made. The amount of gain included in gross income under subsection (a)(1)(B) shall be the excess of— the lesser of the amount of gain excluded under subsection (a)(1)(A) or the fair market value of the investment as determined as of the date described in paragraph (1), over the taxpayer’s basis in the investment. Except as otherwise provided in this subparagraph or subsection (c), the taxpayer’s basis in the investment shall be zero. (a)(1)(B) The basis in the investment shall be increased by the amount of gain recognized by reason of subsection (a)(1)(B) with respect to such investment. In the case of any investment held for at least 5 years, the basis of such investment shall be increased by an amount equal to 10 percent (30 percent in the case of any investment in a qualified rural opportunity fund) of the amount of gain deferred by reason of subsection (a)(1)(A). For purposes of this subsection, any increase in basis under this clause shall be treated as occurring before the date described in paragraph (1)(B). For purposes of subparagraph (B)(iii)— The term qualified rural opportunity fund means a qualified opportunity fund that holds at least 90 percent of its assets in qualified opportunity zone property which— is qualified opportunity zone business property substantially all of the use of which, during substantially all of the fund's holding period for such property, was in a qualified opportunity zone comprised entirely of a rural area, or is qualified opportunity zone stock, or a qualified opportunity zone partnership interest, in a qualified opportunity zone business in which substantially all of the tangible property owned or leased is qualified opportunity zone business property described in subsection (d)(3)(A)(i) and substantially all the use of which is in a qualified opportunity zone comprised entirely of a rural area. For purposes of the preceding sentence, property held in the fund shall be measured under rules similar to the rules of subsection (d)(1). The term rural area means any area other than— a city or town that has a population of greater than 50,000 inhabitants, and any urbanized area contiguous and adjacent to a city or town described in subclause (I). . Section 1400Z-2(c) is amended by striking makes an election under this clause and all that follows and inserting makes an election under this subsection, the basis of such investment shall be equal to— in the case of an investment sold before the date that is 30 years after the date of the investment, the fair market value of such investment on the date such investment is sold or exchanged, or in any other case, the fair market value of such investment on the date that is 30 years after the date of the investment. . Section 1400Z-2(d)(2)(D)(i)(I) is amended by striking December 31, 2017 and inserting the applicable start date (as defined in section 1400Z-1(e)(2)) with respect to the qualified opportunity zone described in subclause
(III). Section 1400Z-2(d)(2) is amended— by striking December 31, 2017, each place it appears in subparagraphs (B)(i)(I) and (C)(i) and inserting the applicable date , and by adding at the end the following new subparagraph: For purposes of this subparagraph, the term applicable date means, with respect to any corporation or partnership which is a qualified opportunity zone business, the earliest date described in subparagraph (D)(i)(I) with respect to the qualified opportunity zone business property held by such qualified opportunity zone business. . Section 1400Z–2(d)(2)(D)(ii) is amended by inserting (50 percent of such adjusted basis in the case of property in a qualified opportunity zone comprised entirely of a rural area (as defined in subsection (b)(2)(C)(ii)) after the adjusted basis of such property . Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to amounts invested in qualified opportunity funds after December 31, 2026. The amendments made by subparagraphs
(A)and
(B)of paragraph
(4)shall apply to property acquired after December 31, 2026. The amendment made by paragraph (4)(C) shall take effect on the date of the enactment of this Act. Subpart A of part III of subchapter A of chapter 61 is amended by inserting after section 6039J the following new sections: Every qualified opportunity fund shall file an annual return (at such time and in such manner as the Secretary may prescribe) containing the information described in subsection (b). The information described in this subsection is— the name, address, and taxpayer identification number of the qualified opportunity fund, whether the qualified opportunity fund is organized as a corporation or a partnership, the value of the total assets held by the qualified opportunity fund as of each date described in section 1400Z–2(d)(1), the value of all qualified opportunity zone property held by the qualified opportunity fund on each such date, with respect to each investment held by the qualified opportunity fund in qualified opportunity zone stock or a qualified opportunity zone partnership interest— the name, address, and taxpayer identification number of the corporation in which such stock is held or the partnership in which such interest is held, as the case may be, each North American Industry Classification System (NAICS) code that applies to the trades or businesses conducted by such corporation or partnership, the population census tract or population census tracts in which the qualified opportunity zone business property of such corporation or partnership is located, the amount of the investment in such stock or partnership interest as of each date described in section 1400Z–2(d)(1), the value of tangible property held by such corporation or partnership on each such date which is owned by such corporation or partnership, the value of tangible property held by such corporation or partnership on each such date which is leased by such corporation or partnership, the approximate number of residential units (if any) for any real property held by such corporation or partnership, and the approximate average monthly number of full-time equivalent employees of such corporation or partnership for the year (within numerical ranges identified by the Secretary) or such other indication of the employment impact of such corporation or partnership as determined appropriate by the Secretary, with respect to the items of qualified opportunity zone business property held by the qualified opportunity fund— the North American Industry Classification System (NAICS) code that applies to the trades or businesses in which such property is held, the population census tract in which the property is located, whether the property is owned or leased, the aggregate value of the items of qualified opportunity zone property held by the qualified opportunity fund as of each date described in section 1400Z–2(d)(1), and in the case of real property, the number of residential units (if any), the approximate average monthly number of full-time equivalent employees for the year of the trades or businesses of the qualified opportunity fund in which qualified opportunity zone business property is held (within numerical ranges identified by the Secretary) or such other indication of the employment impact of such trades or businesses as determined appropriate by the Secretary, with respect to each person who disposed of an investment in the qualified opportunity fund during the year— the name, address, and taxpayer identification number of such person, the date or dates on which the investment disposed was acquired, and the date or dates on which any such investment was disposed and the amount of the investment disposed, and such other information as the Secretary may require. Every person required to make a return under subsection
(a)shall furnish to each person whose name is required to be set forth in such return by reason of subsection (b)(8) (at such time and in such manner as the Secretary may prescribe) a written statement showing— the name, address, and phone number of the information contact of the person required to make such return, and the information required to be shown on such return by reason of subsection (b)(8) with respect to the person whose name is required to be so set forth. For purposes of this section— Any term used in this section which is also used in subchapter Z of chapter 1 shall have the meaning given such term under such subchapter. The term full-time equivalent employees means, with respect to any month, the sum of— the number of full-time employees (as defined in section 4980H(c)(4)) for the month, plus the number of employees determined (under rules similar to the rules of section 4980H(c)(2)(E)) by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120. Every qualified rural opportunity fund (as defined in section 1400Z–2(b)(2)(C)) shall file the annual return required under subsection (a), and the statements required under subsection (c), applied— by substituting qualified rural opportunity for qualified opportunity each place it appears, by substituting section 1400Z–2(b)(2)(C) for section 1400Z–2(d)(1) each place it appears, and by treating any reference (after the application of paragraph (1)) to qualified rural opportunity zone stock, a qualified rural opportunity zone partnership interest, a qualified rural opportunity zone business, or qualified opportunity zone business property as stock, an interest, a business, or property, respectively, described in subclause
(I)or (II), as the case may be, of section 1400Z–2(b)(2)(C)(i). Every applicable qualified opportunity zone business shall furnish to the qualified opportunity fund described in subsection
(b)a written statement at such time, in such manner, and setting forth such information as the Secretary may by regulations prescribe for purposes of enabling such qualified opportunity fund to meet the requirements of section 6039K(b)(5). For purposes of subsection (a), the term applicable qualified opportunity zone business means any qualified opportunity zone business— which is a trade or business of a qualified opportunity fund, in which a qualified opportunity fund holds qualified opportunity zone stock, or in which a qualified opportunity fund holds a qualified opportunity zone partnership interest. Any term used in this section which is also used in subchapter Z of chapter 1 shall have the meaning given such term under such subchapter. Every applicable qualified rural opportunity zone business (as defined in subsection
(b)determined after application of the substitutions described in this sentence) shall furnish the written statement required under subsection (a), applied— by substituting qualified rural opportunity for qualified opportunity each place it appears, and by treating any reference (after the application of paragraph (1)) to qualified rural opportunity zone stock, a qualified rural opportunity zone partnership interest, or a qualified rural opportunity zone business as stock, an interest, or a business, respectively, described in subclause
(I)or (II), as the case may be, of section 1400Z–2(b)(2)(C)(i). . Part II of subchapter B of chapter 68 is amended by inserting after section 6725 the following new section: If any person required to file a return under section 6039K fails to file a complete and correct return under such section in the time and in the manner prescribed therefor, such person shall pay a penalty of $500 for each day during which such failure continues. The maximum penalty under this section on failures with respect to any 1 return shall not exceed $10,000. In the case of any failure described in subsection
(a)with respect to a fund the gross assets of which (determined on the last day of the taxable year) are in excess of $10,000,000, paragraph
(1)shall be applied by substituting $50,000 for $10,000 . If a failure described in subsection
(a)is due to intentional disregard, then— subsection
(a)shall be applied by substituting $2,500 for $500 , subsection (b)(1) shall be applied by substituting $50,000 for $10,000 , and subsection (b)(2) shall be applied by substituting $250,000 for $50,000 . In the case of any failure relating to a return required to be filed in a calendar year beginning after 2025, each of the dollar amounts in subsections (a), (b), and
(c)shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. If the $500 dollar amount in subsection
(a)and (c)(1) or the $2,500 amount in subsection (c)(1), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the next lowest multiple of $10. If the $10,000,000 dollar amount in subsection (b)(2), after being increased under paragraph (1), is not a multiple of $10,000, such dollar amount shall be rounded to the next lowest multiple of $10,000. If any dollar amount in subsection
(b)or
(c)(other than any amount to which subparagraph
(A)or
(B)applies), after being increased under paragraph (1), is not a multiple of $1,000, such dollar amount shall be rounded to the next lowest multiple of $1,000. . Section 6724(d)(2), as amended by the preceding provisions of this Act, is amended— by striking or at the end of subparagraph (LL), by striking the period at the end of subparagraph
(MM)and inserting a comma, and by inserting after subparagraph
(MM)the following new subparagraphs: section 6039K(c) (relating to disposition of qualified opportunity fund investments), or section 6039L (relating to information required from certain qualified opportunity zone businesses and qualified rural opportunity zone businesses). . Section 6011(e) is amended by adding at the end the following new paragraph: Notwithstanding paragraphs
(1)and (2), any return filed by a qualified opportunity fund or qualified rural opportunity fund under section 6039K shall be filed on magnetic media or other machine-readable form. . The table of sections for subpart A of part III of subchapter A of chapter 61 is amended by inserting after the item relating to section 6039J the following new items: Sec. 6039K. Returns with respect to qualified opportunity funds and qualified rural opportunity funds. Sec. 6039L. Information required from qualified opportunity zone businesses and qualified rural opportunity zone businesses. . The table of sections for part II of subchapter B of chapter 68 is amended by inserting after the item relating to section 6725 the following new item: Sec. 6726. Failure to comply with information reporting requirements relating to qualified opportunity funds and qualified rural opportunity funds. . The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, $15,000,000, to remain available until September 30, 2028, for necessary expenses of the Internal Revenue Service to make the reports described in paragraph (2). As soon as practical after the date of the enactment of this Act, and annually thereafter, the Secretary of the Treasury, or the Secretary's delegate (referred to in this section as the Secretary ) shall make publicly available a report on qualified opportunity funds. The report required under paragraph
(2)shall include, to the extent available, the following information: The number of qualified opportunity funds. The aggregate dollar amount of assets held in qualified opportunity funds. The aggregate dollar amount of investments made by qualified opportunity funds in qualified opportunity fund property, stated separately for each North American Industry Classification System (NAICS) code. The percentage of population census tracts designated as qualified opportunity zones that have received qualified opportunity fund investments. For each population census tract designated as a qualified opportunity zone, the approximate average monthly number of full-time equivalent employees of the qualified opportunity zone businesses in such qualified opportunity zone for the preceding 12-month period (within numerical ranges identified by the Secretary) or such other indication of the employment impact of such qualified opportunity fund businesses as determined appropriate by the Secretary. The percentage of the total amount of investments made by qualified opportunity funds in— qualified opportunity zone property which is real property; and other qualified opportunity zone property. For each population census tract, the aggregate approximate number of residential units resulting from investments made by qualified opportunity funds in real property. The aggregate dollar amount of investments made by qualified opportunity funds in each population census tract. Beginning with the report submitted under paragraph
(2)for the 6th year after the date of the enactment of this Act, the Secretary shall include in such report the impacts and outcomes of a designation of a population census tract as a qualified opportunity zone as measured by economic indicators, such as job creation, poverty reduction, new business starts, and other metrics as determined by the Secretary. In the case of any report submitted under paragraph
(2)in the 6th year or the 11th year after the date of the enactment of this Act, the Secretary shall include the following information: For population census tracts designated as a qualified opportunity zone, a comparison (based on aggregate information) of the factors listed in clause
(iii)between the 5-year period ending on the date of the enactment of Public Law 115–97 and the most recent 5-year period for which data is available. For population census tracts designated as a qualified opportunity zone, a comparison (based on aggregate information) of the factors listed in clause
(iii)for the most recent 5-year period for which data is available between such population census tracts and similar population census tracts that were not designated as a qualified opportunity zone. For purposes of clause (i), the Secretary may combine population census tracts into such groups as the Secretary determines appropriate for purposes of making comparisons. The factors listed in this clause are the following: The unemployment rate. The number of persons working in the population census tract, including the percentage of such persons who were not residents in the population census tract in the preceding year. Individual, family, and household poverty rates. Median family income of residents of the population census tract. Demographic information on residents of the population census tract, including age, income, education, race, and employment. The average percentage of income of residents of the population census tract spent on rent annually. The number of residences in the population census tract. The rate of home ownership in the population census tract. The average value of residential property in the population census tract. The number of affordable housing units in the population census tract. The number of new business starts in the population census tract. The distribution of employees in the population census tract by North American Industry Classification System (NAICS) code. In making reports required under this subsection, the Secretary— shall establish appropriate procedures to ensure that any amounts reported do not disclose taxpayer return information that can be associated with any particular taxpayer or competitive or proprietary information, and if necessary to protect taxpayer return information, may combine information required with respect to individual population census tracts into larger geographic areas. Any term used in this subsection which is also used in subchapter Z of chapter 1 of the Internal Revenue Code of 1986 shall have the meaning given such term under such subchapter. The Secretary shall make publicly available, with respect to qualified rural opportunity funds, separate reports as required under this subsection, applied— by substituting qualified rural opportunity for qualified opportunity each place it appears, by substituting a reference to this Act for Public Law 115–97 , and by treating any reference (after the application of subparagraph (A)) to qualified rural opportunity zone stock, qualified rural opportunity zone partnership interest, qualified rural opportunity zone business, or qualified opportunity zone business property as stock, interest, business, or property, respectively, described in subclause
(I)or (II), as the case may be, of section 1400Z–2(b)(2)(C)(i) of the Internal Revenue Code of 1986.
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Sec. 70421
Permanent renewal and enhancement of opportunity zones
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