RELEASE: APRIL 20, 2018 Under the Tax Cuts and Jobs Act of 2017 (“Act”), Congress established “Opportunity Zones” as a new community development program to encourage long-term investments in low-income urban and rural communities throughout the United States. The Opportunity Zones program (“Program”) allows investors with current capital gains tax liabilities to receive favorable tax treatment in exchange for investing in Opportunity Zones. The Opportunity Zones are designated by the Governors of each state and then must be certified by the Secretary of the United States Treasury Department to be eligible to benefit from the Program.Under the Act, the Governors of each state may select up to 25% of the state’s eligible low-income census tracts to become Opportunity Zones. Governor Wolf will be announcing Pennsylvania’s Opportunity Zones today. The Federal Government will then have 30 days to certify the Zones, and once they are certified, those tracts are fixed with that designation for 10 years.Investment in Opportunity Zones must be through Opportunity Funds. Those Funds should be created as a general investment vehicle and as targeted Funds for particular projects. Therefore, Funds should allow flexibility for a variety of investors to pool their resources in the Opportunity Zones, thereby increasing the scale of investments going to underserved areas and also for individual investors to fund specific projects in a Zone. The potential rewards for investors are substantial reductions in Federal taxation, including: Permanent exclusion from federal capital gains taxes on the sale or exchange of an investment in a qualified Opportunity Zune Fund if the investment is held for at least 10 years; Temporary tax deferral for capital gains reinvested in an Opportunity Fund; and A step-up in basis for capital gains invested in an Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the qualified Opportunity Zone Fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxationThe Program is expected to benefit Pennsylvanians by spurring investment in startups, infrastructure, affordable housing, capital improvement investments and other areas, without reducing state or local tax revenue.Watch for more information over the next 30 days as the Zones are designated and certified and contact us for more information about Opportunity Funds and the tax and investment benefits available.For information about Pennsylvania’s designation, check the PA DCED website:https://community.newpa.com/programs-funding/federal-funding-opportunities/qualified-opportunity-zones/Attorney Jack Gross regularly counsels clients with holdings that range from large and diverse real estate portfolios to individual investors.Attorney Kim Spotts-Kimmel has experience with business formation, purchases, sales, mergers, and acquisitions, as well as general corporate matters and tax planning.