[Federal Register Volume 86, Number 148 (Thursday, August 5, 2021)]
[Rules and Regulations]
[Pages 42715-42716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16664]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9889]
RIN 1545-BO4


Investing in Qualified Opportunity Funds; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations; correction.

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SUMMARY: This document contains corrections to Treasury Decision 9889, 
which was published in the Federal Register on Monday, January 13, 
2020. Treasury Decision 9889 contained final regulations under the 
Internal Revenue Code (Code) that govern the extent to which taxpayers 
may elect the Federal income tax benefits with respect to certain 
equity interests in a qualified opportunity fund (QOF).

DATES: These corrections are effective on August 5, 2021 and applicable 
on or after January 13, 2020.

FOR FURTHER INFORMATION CONTACT: Concerning section 1400Z-2 and these 
regulations generally, Harith J. Razaa, (202) 317-7006, or Kyle C. 
Griffin, (202) 317-4718, of the Office of Associate Chief Counsel 
(Income Tax and Accounting). These numbers are not toll-free numbers.

SUPPLEMENTARY INFORMATION:

Background

    The final regulations (TD 9889) that are the subject of this 
correction are under section 1400Z-2 of the Code.

Need for Correction

    As published on January 13, 2020 (85 FR 1866) the final regulations 
(TD 9889) contain errors that need to be corrected.

Correction of Publication

    Accordingly, the final regulations (TD 9889) that are the subject 
of FR Doc. 2019-27846, appearing on page 1866 in the Federal Register 
of January 13, 2020, are corrected as follows:
    1. On page 1897, second and third columns, removing the fourth 
through the sixth sentences of the last paragraph.
    2. On page 1923, first column, the first full paragraph is 
corrected to read: ``As set forth in the final regulations, the 62-
month working capital safe harbor provides that, during the maximum 62-
month covered period, (1) NQFP in excess of the five-percent NQFP 
limitation will not cause a trade or business to fail to qualify as a 
qualified opportunity zone business, and (2) gross income earned from 
the trade or business will be counted towards satisfying the 50-percent 
gross income requirement (each of clauses (1) and (2) function in a 
manner similar to the 31-month working capital safe harbor). In 
addition, the regulations provide additional flexibility for entities 
utilizing the working capital safe harbor. First, for start-up 
entities, the 62-month working capital safe harbor provides that, 
during the maximum 62-month covered period, if property of an entity 
that would otherwise be NQFP is treated as being a reasonable amount of 
working capital under the safe harbor, the entity satisfies the 
requirements of section 1400Z-2(d)(3)(A)(i) only during the working 
capital safe harbor period(s) with regard to such property. However, 
the final regulations make clear that such property is not and will 
never be qualified opportunity zone business property for any purpose. 
Second, for any eligible entity utilizing the working capital safe 
harbor, if tangible property is expected to be qualified opportunity 
zone business property pursuant to the written plan, such tangible 
property is treated as qualified opportunity zone business during the 
working capital safe harbor test for purposes of section 1400Z-2(d)(3). 
Under the 62-month working capital safe harbor, intangible property 
purchased or licensed with working capital covered by the safe harbor, 
and pursuant to the plan submitted with respect to that safe harbor, 
will count towards the satisfaction of the 40-percent intangible 
property use test.''
    3. On page 1926, third column, the second sentence of the first 
full paragraph, the language ``In general, the final regulations permit 
a qualified opportunity zone business to treat tangible property for 
which working capital covered by the 31-month working capital safe 
harbor is expended as (i) used in the trade or business of the 
qualified opportunity zone business, and (ii) qualified opportunity 
zone business property throughout the period during which such working 
capital is covered by the safe harbor.'' is corrected to read ``In 
general, the 62-month working capital safe harbor under the final 
regulations provides that, during the maximum 62-month covered period, 
if property of a start-up entity that would otherwise be NQFP is 
treated as being a reasonable amount of working capital under the safe 
harbor, the start-up entity satisfies the requirements of section 
1400Z-2(d)(3)(A)(i) only during the working capital safe harbor 
period(s) with regard to such property. However, the final regulations 
make clear that such property is not qualified opportunity zone 
business property for any other purpose. See part V.N.3.c of this 
Summary of Comments and Explanation of Revisions describing the 62-
month working capital safe harbor set forth in Sec.  1.1400Z2(d)-
1(d)(3)(vi).''.
    4. On page 1926, third column, the first through the sixth line 
from the bottom of the first full paragraph, the language ``capital 
covered by the 31-month working capital safe harbor are not, following 
the conclusion of the final safe harbor period, treated as tangible 
property for purposes of applying the 70-percent tangible property 
standard.'' is corrected to read ``capital covered by the 62-month 
working capital safe harbor are not, following the conclusion of the 
final safe harbor period, treated as qualified opportunity zone 
business property for purposes of applying the 70-percent tangible 
property standard. Because working capital is not tangible property, 
working capital covered by the 62-month safe harbor cannot be treated 
as qualified opportunity zone business

[[Page 42716]]

property under the proposed regulations or the final regulations except 
as provided in section 1.1400Z2(d)-1(d)(3)(vi)(D).''.

Oluwafunmilayo P. Taylor,
Federal Register Liaison, Publications and Regulations Branch, Legal 
Processing Division, Associate Chief Counsel (Procedure and 
Administration).
[FR Doc. 2021-16664 Filed 8-4-21; 8:45 am]
BILLING CODE 4830-01-P