Introduction.

On October 19,2018,the Internal Revenue Service (the“IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued proposed regulations (the “proposed regulations”) under section 1400Z-2 of the Internal Revenue Code (the “Code”) regarding the qualified opportunity zone program, which was enacted as part of the law commonly referred to as the “Tax Cuts and Jobs Act” (“TCJA”).

The qualified opportunity zone program is designed to encourage investment in distressed communities designated as “qualified opportunity zones” (“opportunity zones”), by providing tax incentives to invest in “qualified opportunity funds” (“opportunity funds”) that, in turn, invest directly or indirectly in the opportunity zones. The statute left many uncertainties regarding the fundamental operations of the program. The proposed regulations answer the most pressing questions with mostly taxpayer-friendly answers. However, some important questions remain unanswered and additional proposed regulations are expected to be issued in the near future.

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