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By Siri Bulusu
Investment fund managers may get a look soon at the Treasury Department’s proposed rules for opportunity zones, a new capital gains tax break, now that the Office of Management and Budget has finished reviewing the regulations.
The OMB’s Office of Information and Regulatory Affairs sent the proposed rules back to Treasury Oct. 17, the OMB website shows—the final step before Treasury and the Internal Revenue Service release the proposed guidance.
Investors get a tax break on capital gains they put into opportunity funds, which are meant to drive economic development in low-income areas designated as qualified opportunity zones. Capital gains earned on the new investments are exempt from capital gains tax when held for more than 10 years, and get partial benefits if held for less time.
Opportunity fund managers have said investors are reluctant to put money into the ventures before seeing what the government’s rules will be.
The incentive, part of last year’s tax overhaul (Pub. L. No. 115-97), could tap into an estimated $6 trillion in idle capital gains, according to an analysis of Federal Reserve data by the Economic Innovation Group, a bipartisan Washington-based public policy organization that is supporting investment in the zones.
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