Division of TaxationThe Opportunity Zone Program was enacted as part of the 2017 federal Tax Cuts and Jobs Act and is designed to encourage long-term capital investments into low-income rural and urban communities. The program offers incentives with regard to the taxation of capital gains for investment in Opportunity Zones such as a temporary deferral of taxation, a step-up in basis, and a permanent tax exclusion for certain qualified transactions.
The US Department of the Treasury approved 169 census tracts in 75 Ó£»¨ÊÓƵ municipalities as Opportunity Zones.
For Gross Income Tax purposes, Ó£»¨ÊÓƵ follows IRC section 1400Z-2 in the deferral of capital gains because, pursuant to N.J.S.A. 54A:8-3(c) and N.J.S.A. 54A: 5-1(c), the method of accounting and the basis of property must be the same as for federal income tax purposes. Ó£»¨ÊÓƵ also follows the special rule for investments held for at least 10 years in IRC 1400Z-2(c) if the taxpayer makes that election federally. The gains are subject to Gross Income Tax when the gain is recognized for federal purposes. This treatment applies to both individuals and pass-through entities.
For Corporation Business Tax purposes, Ó£»¨ÊÓƵ follows IRC section 1400Z-2, because pursuant to N.J.S.A. 54:10A-4 Ó£»¨ÊÓƵ follows the same method of accounting as for federal purposes and Ó£»¨ÊÓƵ's starting point is the entity's federal taxable income, before federal net operating losses and other special deductions, subject to certain modifications under the Corporation Business Tax Act.
The Ó£»¨ÊÓƵ Division of Taxation does not administer this program. For additional information, see the . In addition, you may contact the IRS at CC.ITA.Section.1400@irscounsel.treas.gov or see their .