I 

115TH CONGRESS 

1ST SESSION H. R. 828 

To amend the Internal Revenue Code of 1986 to provide for the deferral 

of inclusion in gross income for capital gains reinvested in opportunity zones. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 2, 2017 

Mr. TIBERI (for himself, Mr. KIND, Mr. MEEHAN, Mr. NEAL, Mr. RENACCI, 

Mr. AGUILAR, Mr. SMITH of Missouri, Ms. SEWELL of Alabama, Mr. 

PAULSEN, Ms. DELBENE, Mr. REICHERT, Mr. COOPER, Ms. JENKINS of 

Kansas, Mr. MOULTON, Mr. STIVERS, Mr. LARSON of Connecticut, Mr. 

LANCE, Mr. POLIS, Mr. SENSENBRENNER, Mr. KHANNA, Mr. RODNEY

DAVIS of Illinois, Mr. YODER, Mr. KILMER, Mr. ROUZER, Mr. SOTO, Mr. 

MARCHANT, Mr. BLUMENAUER, Mr. UPTON, Mr. HIMES, Mr. COLLINS

of New York, Mr. O’HALLERAN, and Mr. PERRY) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for the deferral of inclusion in gross income for capital 

gains reinvested in opportunity zones. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Investing in Oppor5 tunity Act’’. 


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1 SEC. 2. OPPORTUNITY ZONES. 

2 (a) IN GENERAL.—Chapter 1 of the Internal Rev3 enue Code of 1986 is amended by adding at the end the 

4 following: 

5 ‘‘Subchapter Z—Opportunity Zones 

‘‘Sec. 1400Z–1. Designation. 

‘‘Sec. 1400Z–2. Deferral for capital gains invested in opportunity zones. 

6 ‘‘SEC. 1400Z–1. DESIGNATION. 

7 ‘‘(a) QUALIFIED OPPORTUNITY ZONE DEFINED.— 

8 For the purposes of this subchapter, the term ‘qualified 

9 opportunity zone’ means a population census tract that 

10 is a low-income community that is designated as a quali11 fied opportunity zone. 

12 ‘‘(b) DESIGNATION.— 

13 ‘‘(1) GOVERNOR.— 

14 ‘‘(A) IN GENERAL.—For purposes of sub15 section (a), a population census tract that is a 

16 low-income community is designated as a quali17 fied opportunity zone if— 

18 ‘‘(i) not later than the end of the de19 termination period, the governor of the 

20 State in which the tract is located— 

21 ‘‘(I) nominates the tract for des22 ignation as a qualified opportunity 

23 zone, and 


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1 ‘‘(II) notifies the Secretary in 

2 writing of such nomination, and 

3 ‘‘(ii) the Secretary certifies such nomi4 nation and designates such tract as a 

5 qualified opportunity zone before the end 

6 of the consideration period. 

7 ‘‘(B) EXTENSION OF PERIODS.—A gov8 ernor may request that the Secretary extend ei9 ther the determination or consideration period, 

10 or both (determined without regard to this sub11 paragraph), for an additional 30 days. 

12 ‘‘(C) DEEMED DESIGNATION IF SEC13 RETARY FAILS TO ACT.—Unless the tracts are 

14 ineligible for designation, if the Secretary de15 clines in writing to make such certification and 

16 designation or fails to act before the end of the 

17 consideration period, such nomination shall be 

18 deemed to be certified and designated, effective 

19 on the day after the last day of the consider20 ation period. 

21 ‘‘(2) SECRETARY.—If a governor fails to make 

22 the nominations and notifications by the end of the 

23 periods referred to in paragraphs (1)(A) and (1)(B), 

24 the Secretary shall designate and certify population 

25 census tracts that are low-income communities as 


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1 qualified opportunity zones, as permitted by sub2 section (e). 

3 ‘‘(c) OTHER DEFINITIONS.—For purposes of this 

4 subsection— 

5 ‘‘(1) LOW-INCOME COMMUNITIES.—The term 

6 ‘low-income community’ has the same meaning as 

7 when used in section 45D(e). 

8 ‘‘(2) DEFINITION OF PERIODS.— 

9 ‘‘(A) CONSIDERATION PERIOD.—The term 

10 ‘consideration period’ means the 30-day period 

11 beginning on the date on which the Secretary 

12 receives notice under subsection 

13 (b)(1)(A)(i)(II), as extended under subsection 

14 (b)(1)(B). 

15 ‘‘(B) DETERMINATION PERIOD.—The term 

16 ‘determination period’ means the 90-day period 

17 beginning on the date of the enactment of the 

18 Investing in Opportunity Act, as extended 

19 under subsection (b)(1)(B). 

20 ‘‘(d) GUIDANCE FOR OPPORTUNITY ZONE NOMINA21 TIONS.—When considering the nomination of qualified op22 portunity zones, governors should strive for the creation 

23 of qualified opportunity zones that are geographically con24 centrated and contiguous clusters of population census 


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1 tracts and should give particular consideration to areas 

2 that— 

3 ‘‘(1) are currently the focus of mutually rein4 forcing State, local, or private economic development 

5 initiatives to attract investment and foster startup 

6 activity, 

7 ‘‘(2) have demonstrated success in geographi8 cally targeted development programs, such as prom9 ise zones, new market tax credit, empowerment 

10 zones, and renewal communities, and 

11 ‘‘(3) have recently experienced significant lay12 offs due to business closures or relocations. 

13 ‘‘(e) NUMBER OF DESIGNATIONS.— 

14 ‘‘(1) IN GENERAL.—Except as provided by 

15 paragraph (2), the number of population census 

16 tracts in a State that may be designated as qualified 

17 opportunity zones under this section may not exceed 

18 25 percent of the number of low-income communities 

19 in the State. 

20 ‘‘(2) EXCEPTION.—If the number of low-income 

21 communities in a State is less than 100, then a total 

22 of 25 of such tracts may be designated as qualified 

23 opportunity zones. 

24 ‘‘(f) DESIGNATION OF TRACTS CONTIGUOUS WITH

25 LOW-INCOME COMMUNITIES.— 


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1 ‘‘(1) IN GENERAL.—A population census tract 

2 that is not a low-income community may be des3 ignated as a qualified opportunity zone under this 

4 section if— 

5 ‘‘(A) the tract is contiguous with the low6 income community that is designated as a 

7 qualified opportunity zone, and 

8 ‘‘(B) the median family income of the tract 

9 does not exceed 125 percent of the median fam10 ily income of the low-income community with 

11 which the tract is contiguous. 

12 ‘‘(2) LIMITATION.—Not more than 5 percent of 

13 the population census tracts designated in a State as 

14 a qualified opportunity zone may be designated 

15 under paragraph (1). 

16 ‘‘(g) PERIOD FOR WHICH DESIGNATION IS IN EF17 FECT.—A designation as a qualified opportunity zone 

18 shall remain in effect for the period beginning on the date 

19 of the designation and ending at the close of the 10th cal20 endar year beginning on or after such date of designation. 

21 ‘‘SEC. 1400Z–2. DEFERRAL FOR CAPITAL GAINS INVESTED 

22 IN OPPORTUNITY ZONES. 

23 ‘‘(a) SPECIAL RULES WHEN GAIN FROM SALE OF

24 PROPERTY INVESTED IN OPPORTUNITY ZONE PROP25 ERTY.— 


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1 ‘‘(1) EXCLUSION OF GAIN INVESTED IN OPPOR2 TUNITY ZONE PROPERTY.—In the case of gain from 

3 the sale to, or exchange with, an unrelated person of 

4 any property held by the taxpayer, at the election of 

5 the taxpayer— 

6 ‘‘(A) gross income for the taxable year 

7 shall not include so much of such gain as does 

8 not exceed the aggregate cost of all qualified 

9 opportunity zone property acquired by the tax10 payer during the 180-day period beginning on 

11 the date of such sale or exchange, and 

12 ‘‘(B) the amount of gain excluded by sub13 paragraph (A) shall be included in gross income 

14 as provided by paragraph (2). 

15 ‘‘(2) DEFERRAL OF GAIN INVESTED IN OPPOR16 TUNITY ZONE PROPERTY.— 

17 ‘‘(A) YEAR OF INCLUSION.—Except as 

18 provided by subparagraph (C), gain to which 

19 paragraph (1)(B) applies shall be included in 

20 income in the taxable year in which the quali21 fied opportunity zone property related to such 

22 gain is sold or exchanged in the amount deter23 mined under subparagraph (B). 

24 ‘‘(B) AMOUNT INCLUDIBLE.—The amount 

25 of gain determined under this clause shall be— 


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1 ‘‘(i) 100 percent of such gain in the 

2 case of the sale or exchange of the quali3 fied opportunity zone property with respect 

4 to which gain is deferred under paragraph 

5 (1) that is held for less than 5 years, 

6 ‘‘(ii) 90 percent of such gain in the 

7 case of the sale or exchange of the quali8 fied opportunity zone property with respect 

9 to which gain is deferred under paragraph 

10 (1) that is held for at least 5 years but less 

11 than 7 years, and 

12 ‘‘(iii) 85 percent of such gain in the 

13 case of the sale or exchange of the quali14 fied opportunity zone property with respect 

15 to which gain is deferred under paragraph 

16 (1) that is held for at least 7 years. 

17 ‘‘(C) PROPERTY HELD AFTER 2026 TREAT18 ED AS SOLD.—For purposes of subparagraph 

19 (A), any qualified opportunity zone property 

20 that has not been sold or exchanged on or be21 fore December 31, 2026, shall be treated as 

22 sold on December 31, 2026. 

23 ‘‘(3) EXCLUSION OF GAIN ON QUALIFIED OP24 PORTUNITY ZONE PROPERTY HELD FOR AT LEAST 10

25 YEARS.—Except as provided in paragraph (2), in the 


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1 case of the sale or exchange of qualified opportunity 

2 zone property, or an investment in a qualified oppor3 tunity fund, held for at least 10 years, gross income 

4 for the taxable year shall not include any gain from 

5 the sale or exchange of such property or investment. 

6 ‘‘(4) ONE ELECTION PER PROPERTY.—No elec7 tion may be made under paragraph (1) with respect 

8 to a sale or exchange if an election previously made 

9 with respect to such sale or exchange is in effect. 

10 ‘‘(b) BASIS RULES RELATING TO QUALIFIED OPPOR11 TUNITY ZONE PROPERTY.— 

12 ‘‘(1) REDUCED BY GAIN DEFERRED UNDER

13 SUBSECTION (a)(1).—The basis of a qualified oppor14 tunity zone property immediately after its acquisi15 tion under subsection (a) shall be reduced by the 

16 amount of gain deferred by reason of subsection 

17 (a)(1)(A) with respect to such property. 

18 ‘‘(2) INCREASE FOR GAIN RECOGNIZED UNDER

19 SUBSECTION (a)(2).—The basis of qualified oppor20 tunity zone property shall be increased by the 

21 amount of gain recognized by reason of subsection 

22 (a)(2) with respect to such property. 

23 ‘‘(3) SUBSEQUENT INCREASE IN BASIS FOR

24 PROPERTY HELD FOR AT LEAST 5 YEARS BUT LESS

25 THAN 10 YEARS.—In the case of qualified opporVerDate Sep 11 2014 04:10 Feb 09, 2017 Jkt 069200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H828.IH H828

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1 tunity zone property held for at least 5 years but 

2 less than 10 years— 

3 ‘‘(A) PROPERTY HELD FOR 5 YEARS.—For 

4 qualified opportunity zone property held for at 

5 least 5 years, the basis of such property shall 

6 be increased by an amount equal to 10 percent 

7 of the amount of gain deferred by reason of 

8 subsection (a)(1)(A) with respect to such prop9 erty. 

10 ‘‘(B) PROPERTY HELD FOR 7 YEARS.—For 

11 qualified opportunity zone property held for at 

12 least 7 years, the basis of such property shall 

13 be increased by an amount equal to 5 percent 

14 of the amount of gain deferred by reason of 

15 subsection (a)(1)(A) with respect to such prop16 erty. 

17 ‘‘(c) QUALIFIED OPPORTUNITY ZONE PROPERTY.— 

18 For purposes of this section: 

19 ‘‘(1) IN GENERAL.—The term ‘qualified oppor20 tunity zone property’ means property which is— 

21 ‘‘(A) qualified opportunity zone stock, 

22 ‘‘(B) qualified opportunity zone partner23 ship interest, 

24 ‘‘(C) qualified opportunity zone business 

25 property, or 


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1 ‘‘(D) an interest in a qualified investment 

2 fund. 

3 ‘‘(2) QUALIFIED OPPORTUNITY ZONE STOCK.— 

4 ‘‘(A) IN GENERAL.—Except as provided in 

5 subparagraph (B), the term ‘qualified oppor6 tunity zone stock’ means any stock in a domes7 tic corporation if— 

8 ‘‘(i) such stock is acquired by the tax9 payer after December 31, 2017, at its 

10 original issue (directly or through an un11 derwriter) from the corporation solely in 

12 exchange for cash, 

13 ‘‘(ii) as of the time such stock was 

14 issued, such corporation was a qualified 

15 opportunity zone business (or, in the case 

16 of a new corporation, such corporation was 

17 being organized for purposes of being a 

18 qualified opportunity zone business), and 

19 ‘‘(iii) during substantially all of the 

20 taxpayer’s holding period for such stock, 

21 such corporation qualified as a qualified 

22 opportunity zone business. 

23 ‘‘(B) REDEMPTIONS.—A rule similar to 

24 the rule of section 1202(c)(3) shall apply for 

25 purposes of this paragraph. 


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1 ‘‘(3) QUALIFIED OPPORTUNITY ZONE PARTNER2 SHIP INTEREST.—The term ‘qualified opportunity 

3 zone partnership interest’ means any capital or prof4 its interest in a domestic partnership if— 

5 ‘‘(A) such interest is acquired by the tax6 payer after December 31, 2017, from the part7 nership solely in exchange for cash, 

8 ‘‘(B) as of the time such interest was ac9 quired, such partnership was a qualified oppor10 tunity zone business (or, in the case of a new 

11 partnership, such partnership was being orga12 nized for purposes of being a qualified oppor13 tunity zone business), and 

14 ‘‘(C) during substantially all of the tax15 payer’s holding period for such interest, such 

16 partnership qualified as a qualified opportunity 

17 zone business. 

18 ‘‘(4) QUALIFIED OPPORTUNITY ZONE BUSINESS

19 PROPERTY.— 

20 ‘‘(A) IN GENERAL.—The term ‘qualified 

21 opportunity zone business property’ means tan22 gible property used in a trade or business of the 

23 taxpayer if— 

24 ‘‘(i) such property was acquired by 

25 the taxpayer by purchase (as defined in 


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1 section 179(d)(2)) after December 31, 

2 2017, 

3 ‘‘(ii) the original use of such property 

4 in the qualified opportunity zone com5 mences with the taxpayer or the taxpayer 

6 substantially improves the property, and 

7 ‘‘(iii) during substantially all of the 

8 taxpayer’s holding period for such prop9 erty, substantially all of the use of such 

10 property was in a qualified opportunity 

11 zone. 

12 ‘‘(B) SUBSTANTIAL IMPROVEMENT.—For 

13 purposes of subparagraph (A)(ii), property shall 

14 be treated as substantially improved by the tax15 payer only if, during any 30-month period be16 ginning after the date of acquisition of such 

17 property, additions to basis with respect to such 

18 property in the hands of the taxpayer exceed an 

19 amount equal to the adjusted basis of such 

20 property at the beginning of such 30-month pe21 riod in the hands of the taxpayer. 

22 ‘‘(C) RELATED PARTY.—For purposes of 

23 subparagraph (A)(i), the related person rule of 

24 section 179(d)(2) shall be applied pursuant to 


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1 paragraph (8) of this subsection in lieu of the 

2 application of such rule in section 179(d)(2)(A). 

3 ‘‘(5) QUALIFIED OPPORTUNITY FUND.—The 

4 term ‘qualified opportunity fund’ means any invest5 ment vehicle organized as a corporation or a part6 nership for the purpose of investing in qualified op7 portunity zone property (other than another quali8 fied opportunity fund) that holds at least 90 percent 

9 of its assets in qualified opportunity zone property, 

10 determined— 

11 ‘‘(A) on the last day of the first 6-month 

12 period of the taxable year of the fund, and 

13 ‘‘(B) on the last day of the taxable year of 

14 the fund. 

15 ‘‘(6) QUALIFIED OPPORTUNITY ZONE BUSI16 NESS.— 

17 ‘‘(A) IN GENERAL.—The term ‘qualified 

18 opportunity zone business’ means a trade or 

19 business— 

20 ‘‘(i) in which substantially all of the 

21 tangible property owned or leased by the 

22 taxpayer is qualified opportunity zone busi23 ness property, 


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1 ‘‘(ii) which satisfies the requirements 

2 of paragraphs (2), (4), and (8) of section 

3 1397C(b), and 

4 ‘‘(iii) which is not described in section 

5 144(c)(6)(B). 

6 ‘‘(B) SPECIAL RULE.—For purposes of 

7 subparagraph (A), tangible property that ceases 

8 to be a qualified opportunity zone business 

9 property shall continue to be treated as a quali10 fied opportunity zone business property for the 

11 lesser of— 

12 ‘‘(i) 5 years after the date on which 

13 such tangible property ceases to be so 

14 qualified, or 

15 ‘‘(ii) the date on which such tangible 

16 property is no longer held by the qualified 

17 opportunity zone business. 

18 ‘‘(d) APPLICABLE RULES.— 

19 ‘‘(1) IN GENERAL.—For purposes of this sec20 tion and except as otherwise provided in this section, 

21 rules similar to the rules applicable to deferred like 

22 kind exchanges under section 1031 shall apply ex23 cept that reinvestment in opportunity zone property 

24 need not require an intermediary party. 


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1 ‘‘(2) RELATED PERSONS.—For purposes of this 

2 subsection, persons are related to each other if such 

3 persons are described in section 267(b) or 707(b)(1), 

4 determined by substituting ‘20 percent’ for ‘50 per5 cent’ each place it occurs in such sections. 

6 ‘‘(3) DECEDENTS.—In the case of a decedent, 

7 amounts recognized under this section shall, if not 

8 properly includible in the gross income of the dece9 dent, be includible in gross income as provided by 

10 section 691. 

11 ‘‘(4) REGULATIONS.—The Secretary shall pre12 scribe such regulations as may be necessary or ap13 propriate to carry out the purposes of this section, 

14 including— 

15 ‘‘(A) rules providing for proportionate in16 clusion in income and increases in basis for 

17 purposes of subsections (a) and (b) in cases in 

18 which a sale or exchange of any qualified oppor19 tunity zone property with respect to which gain 

20 is deferred under subsection (a)(1)(A) is less 

21 than all of such property, 

22 ‘‘(B) rules requiring taxpayers to provide 

23 such information as the Secretary determines to 

24 be necessary or appropriate for the identifica25 tion of both the assets sold (including basis and 


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1 sale price) and the assets acquired and invest2 ments made, and 

3 ‘‘(C) rules to prevent abuse. 

4 ‘‘(e) FAILURE OF QUALIFIED OPPORTUNITY FUND

5 TO MAINTAIN INVESTMENT STANDARD.— 

6 ‘‘(1) IN GENERAL.—If a qualified opportunity 

7 fund fails to meet the 90-percent requirement of 

8 subsection (c)(5), the qualified opportunity fund 

9 shall pay a penalty for each month it fails to meet 

10 the requirement in an amount equal to the product 

11 of— 

12 ‘‘(A) the excess of— 

13 ‘‘(i) the amount equal to 90 percent of 

14 its aggregate assets, over 

15 ‘‘(ii) the aggregate amount of quali16 fied opportunity zone property held by the 

17 fund, multiplied by 

18 ‘‘(B) the underpayment rate established 

19 under section 6621(a)(2) for such month. 

20 ‘‘(2) SPECIAL RULE FOR PARTNERSHIPS.—In 

21 the case that the qualified opportunity fund is a 

22 partnership, the penalty imposed by paragraph (1) 

23 shall be taken into account proportionately as part 

24 of the distributive share of each partner of the part25 nership. 


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1 ‘‘(3) REASONABLE CAUSE EXCEPTION.—No 

2 penalty shall be imposed under this subsection with 

3 respect to any failure if it is shown that such failure 

4 is due to reasonable cause.’’. 

5 (b) BASIS ADJUSTMENTS.—Section 1016(a) of such 

6 Code is amended by striking ‘‘and’’ at the end of para7 graph (36), by striking the period at the end of paragraph 

8 (37) and inserting ‘‘, and’’, and by inserting after para9 graph (37) the following: 

10 ‘‘(38) to the extent provided in section 1400Z– 

11 2(b).’’. 

12 (c) REPORT TO CONGRESS.—The Secretary of the 

13 Treasury, or the Secretary’s delegate, shall submit a re14 port to Congress on the opportunity zone incentives en15 acted by this section beginning 5 years after the date of 

16 enactment of this Act and annually thereafter. The report 

17 shall include an assessment of investments held by quali18 fied opportunity funds nationally and at the State level. 

19 To the extent such information is available, the report 

20 shall include the number of qualified opportunity funds, 

21 the amount of assets held in qualified opportunity funds, 

22 the composition of qualified opportunity fund investments 

23 by asset class, the percentage of qualified opportunity zone 

24 census tracts designated under subchapter Z of the Inter25 nal Revenue Code of 1986 (as added by this section) that 


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1 have received qualified opportunity fund investments. The 

2 report shall also include an assessment of the impacts and 

3 outcomes of the investments in those areas on economic 

4 indicators including job creation, poverty reduction, and 

5 new business starts, and other metrics as determined by 

6 the Secretary. 

7 (d) CLERICAL AMENDMENT.—The table of sub8 chapters for chapter 1 of such Code is amended by adding 

9 at the end the following new item: 

‘‘SUBCHAPTER Z. OPPORTUNITY ZONES’’. 

10 (e) EFFECTIVE DATE.—The amendments made by 

11 this section shall take effect on the date of the enactment 

12 of this Act. 

Æ 


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