Treasury Offers Opportunity Zone Participants Pandemic Relief in Notice 2020-39– June 09, 2020 by Dave Sobochan

Participants in the Qualified Opportunity (QO) Zone Program were provided with much needed relief on June 4, 2020, when Treasury issued Notice 2020-39. This notice clarifies relief provided under Section 7508A for QO Zone Funds and their investors in response to the COVID-19 pandemic, and addresses the application of certain relief provisions in the Section 1400Z-2 regulations.

Namely, Notice 2020-39 addresses the 180-day investment period, 90% investment standard, 30-month substantial improvement period, 31-month working capital safe harbor and the 12-month reinvestment period.

180-Day Investment Period

Notice 2020-39 modifies prior guidance (Notice 2020-23), which postponed to July 15 any deadline for the 180-day investment requirement that otherwise would have occurred beginning on or after April 1, 2020, and before July 15, 2020.

Now, if the last day of the 180-day investment period — within which a taxpayer must make an investment in a QO Fund to satisfy the related investment requirement — begins on or after April 1, 2020, and before December 31, 2020, the last day of that 180-day investment period is postponed to December 31, 2020.

90% Investment Standard

For QO Funds whose last day of the first six-month period of the taxable year, or last day of the taxable year, is within the period beginning on or after April 1, 2020, and before December 31, 2020, any failure to satisfy the 90% investment standard for that taxable year is presumed to be due to reasonable cause and not subject to the penalty.

This relief is automatic and does not require notifying the IRS. However, an affected QO Fund still must accurately complete Form 8996, placing a 0 in Part IV, Line 8 (the penalty line).

30-Month Substantial Improvement Period

The 30-month substantial improvement period is suspended during the period beginning on April 1, 2020, and ending on December 31, 2020, for purposes of the substantial improvement requirement for property held by a QO Fund or QO Zone business.

31-Month Working Capital Safe Harbor

All QO Zone businesses currently using the working capital safe harbor receive an automatic 24-month extension to the 31-month safe harbor period.

12-Month Reinvestment Period

Notice 2020-39 provides a 12-month extension to the end of the 12-month reinvestment period for QO Funds whose reinvestment period began before January 20, 2020, and ends after January 20, 2020.


Contact Dave Sobochan at dsobochan@cohencpa.com or a member of your service team to discuss this topic further.


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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.