,,ii #aaf? ,,congress #b;d ,session ,s4 #dghj ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,octob] #a1 #bjbj,mr4 ,k5n$y introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,f9ance ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to provide = qualifi$ ,hurricane ,laura recov]y opportunity zones1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,hurricane ,laura ,recov]y ,opportunity ,zones ,act4 #b4 ,qualifi$ ,hurricane ,laura recov]y opportunity zones 7a7 ,9 g5]al ,*apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+3 ,,aa ,hurricane ,laura recov]y opportunity zones ,sec4 #adjj;,,aa-#a4 ,designation4 ,sec4 #adjj;,,aa-#b4 ,special rules = capital ga9s inve/$ 9 ,hurricane ,laura ,recov]y ,opportunity ,zones4 #adjj;,,aa-#a4 ,designation 7a7 ,qualifi$ ,hurricane ,laura recov]y opportunity zone def9$ ,= purposes ( ?is *apt]1 ! t]m qualifi$ ,hurricane ,laura recov]y opportunity zone means any c5sus tract t-- 7#a7 is a l[ income community 7z def9$ 9 section #adjj,z-#a7;c771 & 7#b7 is locat$ )9 ! ,hurricane ,laura disa/] zone4 7b7 ,qualifi$ ,hurricane ,laura disa/] zone ,= purposes ( ?is *apt]1 ! t]m qualifi$ ,hurricane ,laura disa/] zone means an area-- 7#a7 ) respect to :i* a major disa/] has be5 decl>$ by ! ,presid5t "u section #dja ( ! ,rob]t ,t4 ,/af=d ,disa/] ,relief & ,em]g5cy ,assi/ance ,act be=e ,septemb] #cj1 #bjbj1 by reason ( ,hurricane ,laura1 & 7#b7 :i* has be5 det]m9$ by ! ,presid5t to w>rant individual or individual & public assi/ance f ! ,f$]al ,gov]nm5t "u su* ,act by reason ( ,hurricane ,laura4 7c7 ,p]iod ( treatm5t ,a c5sus tract describ$ 9 subsection 7a7 %all n be treat$ z a qualifi$ ,hurricane ,laura recov]y opportunity zone-- 7#a7 = any p]iod be=e ,augu/ #bh1 #bjbj1 or 7#b7 = any p]iod aft] ! close ( ! #aj? cal5d> ye> beg9n+ on or aft] su* date4 #adjj;,,aa-#b4 ,special rules = capital ga9s inve/$ 9 ,hurricane ,laura recov]y opportunity zones 7a7 ,9 g5]al 7#a7 ,treatm5t ( ga9s ,9 ! case ( capital ga9 f ! sale to1 or ex*ange )1 an unrelat$ p]son ( any prop]ty held by ! taxpay]1 at ! election ( ! taxpay]-- 7,a7 gross income = ! taxable ye> %all n include s mu* ( su* ga9 z does n exce$ ! aggregate am\nt inve/$ by ! taxpay] 9 a qualifi$ ,hurricane ,laura recov]y opportunity fund dur+ ! #ahj-;day p]iod beg9n+ on ! date ( su* sale or ex*ange1 7,b7 ! am\nt ( ga9 exclud$ by subp>agraph 7,a7 %all be includ$ 9 gross income z provid$ by subsection 7b71 & 7,c7 subsection 7c7 %all apply4 ,! prec$+ s5t5ce %all n apply 9 ! case ( any ga9 :i* is treat$ "u ?is *apt] z ord9>y income4 7#b7 ,election ,no election may be made "u p>agraph 7#a7-- 7,a7 ) respect to a sale or ex*ange if an election previ\sly made ) respect to su* sale or ex*ange is 9 effect1 or 7,b7 ) respect to any sale or ex*ange aft] ,decemb] #ca1 #bjcj4 7b7 ,def]ral ( ga9 inve/$ 9 opportunity zone prop]ty 7#a7 ,ye> ( inclusion ,ga9 to :i* subsection 7a77#a77;,b7 applies %all be includ$ 9 income 9 ! taxable ye> :i* includes ! e>li] (-- 7,a7 ! date on :i* su* inve/m5t is sold or ex*ang$1 or 7,b7 ,decemb] #ca1 #bjcj4 7#b7 ,am\nt includible 7,a7 ,9 g5]al ,! am\nt ( ga9 includ$ 9 income "u subsection 7a77#a77;,b7 %all be ! excess (-- 7i7 ! less] ( ! am\nt ( ga9 exclud$ "u subsection 7a77#a77;,a7 or ! fair m>ket value ( ! inve/m5t z det]m9$ z ( ! date describ$ 9 p>agraph 7#a71 ov] 7ii7 ! taxpay]'s basis 9 ! inve/m5t4 7,b7 ,det]m9ation ( basis 7i7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subp>agraph or subsection 7c71 ! taxpay]'s basis 9 ! inve/m5t %all be z]o4 7ii7 ,increase = ga9 recogniz$ "u subsection 7a77#a77;,b7 ,! basis 9 ! inve/m5t %all be increas$ by ! am\nt ( ga9 recogniz$ by reason ( subsection 7a77#a77;,b7 ) respect to su* inve/m5t4 7iii7 ,inve/m5ts held = #e ye>s ,9 ! case ( any inve/m5t held = at lea/ #e ye>s1 ! basis ( su* inve/m5t %all be increas$ by an am\nt equal to #aj p]c5t ( ! am\nt ( ga9 def]r$ by reason ( subsection 7a77#a77;,a74 7iv7 ,inve/m5ts held = #g ye>s ,9 ! case ( any inve/m5t held by ! taxpay] = at lea/ #g ye>s1 9 addition to any adju/m5t made "u clause 7iii71 ! basis ( su* prop]ty %all be increas$ by an am\nt equal to #e p]c5t ( ! am\nt ( ga9 def]r$ by reason ( subsection 7a77#a77;,a74 7c7 ,special rule = inve/m5ts held = at lea/ #aj ye>s ,9 ! case ( any inve/m5t held by ! taxpay] = at lea/ #aj ye>s & ) respect to :i* ! taxpay] makes an election "u ?is subsection1 ! basis ( su* inve/m5t %all be equal to ! fair m>ket value ( su* inve/m5t on ! date t ! inve/m5t is sold or ex*ang$4 7d7 ,qualifi$ ,hurricane ,laura recov]y opportunity fund ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m qualifi$ ,hurricane ,laura recov] opportunity fund means any inve/m5t vehicle :i* is organiz$ z a corporation or a p>tn]%ip = ! purpose ( inve/+ 9 qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty 7o!r ?an ano!r qualifi$ ,hurricane ,laura recov]y opportunity fund7 t holds at lea/ #ij p]c5t ( its assets 9 qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty1 det]m9$ by ! av]age ( ! p]c5tage ( qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty held 9 ! fund z measur$-- 7,a7 on ! la/ day ( ! fir/ #f-mon? p]iod ( ! taxable ye> ( ! fund1 & 7,b7 on ! la/ day ( ! taxable ye> ( ! fund4 7#b7 ,qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty 7,a7 ,9 g5]al ,! t]m qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty means prop]ty :i* is-- 7i7 qualifi$ ,hurricane ,laura recov]y opportunity zone /ock1 7ii7 qualifi$ ,hurricane ,laura recov]y opportunity zone p>tn]%ip int]e/1 or 7iii7 qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess prop]ty4 7,b7 ,qualifi$ ,hurricane ,laura recov]y opportunity zone /ock 7i7 ,9 g5]al ,except z provid$ 9 clause 7ii71 ! t]m qualifi$ ,hurricane ,laura recov]y opportunity zone /ock means any /ock 9 a dome/ic corporation if-- 7,i7 su* /ock is acquir$ by ! qualifi$ ,hurricane ,laura recov]y opportunity fund aft] ,decemb] #ca1 #bjbj1 at its orig9al issue 7directly or ?r\gh an und]writ]7 f ! corporation solely 9 ex*ange = ca%1 7,,ii7 z ( ! "t su* /ock 0 issu$1 su* corporation 0 a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess 7or1 9 ! case ( a new corporation1 su* corporation 0 be+ organiz$ = purposes ( be+ a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess71 & 7,,iii7 dur+ sub/antially all ( ! qualifi$ ,hurricane ,laura recov]y opportunity fund's hold+ p]iod = su* /ock1 su* corporation qualifi$ z a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess4 7ii7 ,r$emptions ,a rule simil> to ! rule ( section #abjb7;c77#c7 %all apply = purposes ( ?is p>agraph4 7,c7 ,qualifi$ ,hurricane ,laura recov]y opportunity zone p>tn]%ip int]e/ ,! t]m qualifi$ ,hurricane ,laura recov]y opportunity zone p>tn]%ip int]e/ means any capital or pr(its int]e/ 9 a dome/ic p>tn]%ip if-- 7i7 su* int]e/ is acquir$ by ! qualifi$ ,hurricane ,laura recov]y opportunity fund aft] ,decemb] #ca1 #bjbj1 f ! p>tn]%ip solely 9 ex*ange = ca%1 7ii7 z ( ! "t su* int]e/ 0 acquir$1 su* p>tn]%ip 0 a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess 7or1 9 ! case ( a new p>tn]%ip1 su* p>tn]%ip 0 be+ organiz$ = purposes ( be+ a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess71 & 7iii7 dur+ sub/antially all ( ! qualifi$ ,hurricane ,laura recov]y opportunity fund's hold+ p]iod = su* int]e/1 su* p>tn]%ip qualifi$ z a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess4 7,d7 ,qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess prop]ty 7i7 ,9 g5]al ,! t]m qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess prop]ty means tangible prop]ty us$ 9 a trade or bus9ess ( ! qualifi$ ,hurricane ,laura recov]y opportunity fund if-- 7,i7 su* prop]ty 0 acquir$ by ! qualifi$ ,hurricane ,laura recov]y opportunity fund by pur*ase 7z def9$ 9 section #agi7;d77#b77 aft] ,decemb] #ca1 #bjbj1 7,,ii7 ! orig9al use ( su* prop]ty comm5ces ) ! qualifi$ ,hurricane ,laura recov]y opportunity fund or ! qualifi$ ,hurricane ,laura recov]y opportunity fund sub/antially improves ! prop]ty1 & 7,,iii7 dur+ sub/antially all ( ! qualifi$ ,hurricane ,laura recov]y opportunity fund's hold+ p]iod = su* prop]ty1 sub/antially all ( ! use ( su* prop]ty 0 9 a qualifi$ ,hurricane ,laura recov]y opportunity zone4 7ii7 ,sub/antial improvem5t ,= purposes ( clause 7i77,,ii71 prop]ty %all be treat$ z sub/antially improv$ by ! qualifi$ ,hurricane ,laura recov]y opportunity fund only if1 dur+ any #cj-mon? p]iod beg9n+ aft] ! date ( acquisition ( su* prop]ty1 additions to basis ) respect to su* prop]ty 9 ! h&s ( ! qualifi$ ,hurricane ,laura recov]y opportunity fund exce$ an am\nt equal to ! adju/$ basis ( su* prop]ty at ! beg9n+ ( su* #cj-mon? p]iod 9 ! h&s ( ! qualifi$ ,hurricane ,laura recov]y opportunity fund4 7iii7 ,relat$ p>ty ,= purposes ( clause 7i77,i7-- 7,i7 prop]ty %all n be treat$ z acquir$ by pur*ase if acquir$ f a relat$ p]son 7)9 ! mean+ ( subsection 7e77#b771 & 7,,ii7 section #agi7;d77#b7 %all be appli$ )\t reg>d to subp>agraph 7,a7 !re(4 7#c7 ,qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess 7,a7 ,9 g5]al ,! t]m qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess means a trade or bus9ess-- 7i7 9 :i* sub/antially all ( ! tangible prop]ty own$ or leas$ by ! taxpay] is qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess prop]ty 7det]m9$ by sub/itut+ qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess = qualifi$ ,hurricane ,laura recov]y opportunity fund ea* place x appe>s 9 p>agraph 7#b77;,d771 7ii7 :i* satisfies ! requirem5ts ( p>agraphs 7#b71 7#d71 & 7#h7 ( section #acig;,c7b71 & 7iii7 :i* is n describ$ 9 section #add7;c77#f77;,b74 7,b7 ,special rule ,= purposes ( subp>agraph 7,a71 tangible prop]ty t ceases to be a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess prop]ty %all cont9ue to be treat$ z a qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess prop]ty = ! less] (-- 7i7 #e ye>s aft] ! date on :i* su* tangible prop]ty ceases to be s qualifi$1 or 7ii7 ! date on :i* su* tangible prop]ty is no long] held by ! qualifi$ ,hurricane ,laura recov]y opportunity zone bus9ess4 7e7 ,applicable rules 7#a7 ,treatm5t ( inve/m5ts ) mix$ funds ,9 ! case ( any inve/m5t 9 a qualifi$ ,hurricane ,laura recov]y opportunity fund only a portion ( :i* consi/s ( inve/m5ts ( ga9 to :i* an election "u subsection 7a7 is 9 effect-- 7,a7 su* inve/m5t %all be treat$ z #b sep>ate inve/m5ts1 consi/+ (-- 7i7 "o inve/m5t t only includes am\nts to :i* ! election "u subsection 7a7 applies1 & 7ii7 a sep>ate inve/m5t consi/+ ( o!r am\nts1 & 7,b7 subsections 7a71 7b71 & 7c7 %all only apply to ! inve/m5t describ$ 9 subp>agraph 7,a77i74 7#b7 ,relat$ p]sons ,= purposes ( ?is section1 p]sons are relat$ to ea* o!r if su* p]sons are describ$ 9 section #bfg7;b7 or #gjg7;b77#a71 det]m9$ by sub/itut+ #bj p]c5t = #ej p]c5t ea* place x occurs 9 su* sections4 7#c7 ,dec$5ts ,9 ! case ( a dec$5t1 am\nts includible 9 gross income "u ?is section %all1 if n prop]ly includible 9 ! gross income ( ! dec$5t1 be includible 9 gross income z provid$ by section #fia4 7#d7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+-- 7,a7 rules = ! c]tification ( qualifi$ ,hurricane ,laura recov]y opportunity funds = ! purposes ( ?is section1 7,b7 rules to ensure a qualifi$ ,hurricane ,laura recov]y opportunity fund has a reasonable p]iod ( "t to re9ve/ ! return ( capital f inve/m5ts 9 qualifi$ ,hurricane ,laura recov]y opportunity zone /ock & qualifi$ ,hurricane ,laura recov]y opportunity zone p>tn]%ip int]e/s1 & to re9ve/ proce$s receiv$ f ! sale or disposition ( qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty1 & 7,c7 rules to prev5t abuse4 7f7 ,failure ( qualifi$ ,hurricane ,laura recov]y opportunity fund ,to ma9ta9 inve/m5t /&>d 7#a7 ,9 g5]al ,if a qualifi$ ,hurricane ,laura recov]y opportunity fund fails to meet ! #ij-p]c5t requirem5t ( subsection 7d77#a71 ! qualifi$ ,hurricane ,laura recov]y opportunity fund %all pay a p5alty = ea* mon? x fails to meet ! requirem5t 9 an am\nt equal to ! product (-- 7,a7 ! excess (-- 7i7 ! am\nt equal to #ij p]c5t ( its aggregate assets1 ov] 7ii7 ! aggregate am\nt ( qualifi$ ,hurricane ,laura recov]y opportunity zone prop]ty held by ! fund1 multipli$ by 7,b7 ! und]paym5t rate e/abli%$ "u section #ffba7;a77#b7 = su* mon?4 7#b7 ,special rule = p>tn]%ips ,9 ! case t ! qualifi$ ,hurricane ,laura recov]y opportunity fund is a p>tn]%ip1 ! p5alty impos$ by p>agraph 7#a7 %all be tak5 into acc\nt proportionately z "p ( ! di/ributive %>e ( ea* p>tn] ( ! p>tn]%ip4 7#c7 ,reasonable cause exception ,no p5alty %all be impos$ "u ?is subsection ) respect to any failure if x is %[n t su* failure is due to reasonable cause4 4 7b7 ,basis adju/m5ts ,section #ajaf7;a7 ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by /rik+ & at ! end ( p>agraph 7#cg71 by /rik+ ! p]iod at ! end ( p>agraph 7#ch7 & ins]t+ 1 &1 & by ins]t+ aft] p>agraph 7#ch7 ! foll[+3 7#ci7 to ! ext5t provid$ 9 subsections 7b77#b7 & 7c7 ( section #adjj;,,aa-#b4 4 7c7 ,cl]ical am5dm5t ,! table ( sub*apt]s = *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new item3 ,sub*apt] ,,aa4 ,hurricane ,laura recov]y opportunity zone 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all take effect on ! date ( ! enactm5t ( ?is ,act4 #c4 ,s5se ( ! ,congress relat+ to ma9ta9+ capital ga9s rates ,x is ! s5se ( ,congress t ! rate ( tax on income f capital ga9s 7z 9 effect on ! date ( ! enactm5t ( ?is ,act7 %\ld n be *ang$4