UPDATE: The U.S. Treasury Department approves Governor Asa Hutchinson’s nominations for Arkansas’s 85 Opportunity Zones.
Texarkana, Arkansas was included in the Opportunity Zones.
It’s a program that Congress established in the Tax Cut and Jobs Act of 2017.
Opportunity Zones is an incentive program that allows private investors to defer payment of taxes on capital gains on profits they earn on investments in the certified zones. They must invest the money through a corporation or partnership that was organized for the specific purpose of investing in Opportunity Zones.
“Treasury’s approval means that some of our communities that are struggling economically will have the chance to enjoy the new opportunities that come with fresh thinking and new investment,” Governor Hutchinson said. “This money is a down-payment on a better quality of life for many Arkansans.”
ORIGINAL: Arkansas Governor Asa Hutchinson has nominated 85 Opportunity Zones, including Texarkana, to the U.S. Treasury Department, which will provide final approval.
Established by Congress in the Tax Cuts and Jobs Act of 2017, Opportunity Zones provide tax incentives for private investment in low-income communities nationwide.
A qualified Opportunity Fund is any investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zone assets. The fund must hold at least 90 percent of its assets in qualifying property. The U.S. Treasury must certify new Opportunity Funds and is responsible for prescribing regulations regarding certification.
“I’m excited about the potential investment that will be encouraged in low-economic areas of our state,” Governor Hutchinson said. “One of my goals as governor from day one has been to increase economic opportunities for all Arkansans. By investing in these high-potential areas, we will be able to breathe new life into communities and ensure our state remains economically diverse and healthy.”
Eligible zones are based on U.S. Census tracts, and governors of each state may nominate up to 25 percent of eligible tracts for approval. Benefits for investors include a temporary tax deferral for capital gains, a step-up basis for capital gains invested, and a permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund if the investment is held for at least 10 years.
Arkansas has 337 qualified tracts, and Arkansas Economic Development Commission (AEDC) officials said those nominated were chosen based on their potential for economic success and ability to attract investment.
“We will work closely with communities to find the right investment opportunities,” said AEDC Executive Director Mike Preston, “that will create jobs to suit their workforce and local economic development efforts.”
In the next few months, the Treasury Department will approve a total of approximately 8,700 Opportunity Zones nationwide. It is estimated that potential capital eligible for reinvestment in the zones will total $6.1 trillion.