Recent Tax Legislation May Boost Impact Finance

The U.S. Tax Cuts and Jobs Act (the “Act“), signed into law on December 22, 2017, creates a process to designate certain low-income community census tracts as “qualified opportunity zones” and lets investors temporarily defer taxes by investing capital gains in these designated qualified opportunity zones. The provision is designed to encourage investment in these low-income areas. The provision was based on the Investing in Opportunity Act that was introduced in 2016.

For a tract to be designated as a qualified opportunity zone, the state governor nominates the tract for designation within 90 days after the enactment of the Act, and then the U.S. Treasury must approve the designation within 30 days. The designation remains in effect for 10 years. Up to 25 percent of the total number of low-income census tracts in a state can be designated. The Act allows for temporary deferral and some reduction of capital gains that are reinvested in qualified opportunity funds (entities with at least 90 percent of their assets invested in qualified opportunity zone property) and held for five to seven years, and permanent exclusion of capital gains from sale or exchange of investments in qualified opportunity funds that are held for at least 10 years.

The final Act also preserved certain tax credits related to community development and renewable energy that earlier versions had proposed eliminating. The Act retains low-income housing tax credits, as well as private activity bonds, used to finance affordable housing; new markets tax credits; and investment tax credits and production tax credits for renewable energy projects. The Act also preserves the 20 percent historic rehabilitation tax credit but implements a longer claim period and eliminates the 10 percent credit (subject to transition rules).

Brexit – What Now For Your Business

So, the UK has voted to leave the EU. Everyone has their own opinion and we’ve all seen the news reports and various viewpoints but what does this result mean for you in practical terms and where do we go from here? Orrick’s EU-UK Working Group is ready and waiting to answer any questions you may have (see contact details at the end of this alert) and in the meantime, here’s our overview of the key issues for your business. READ MORE