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 fol-
lowing 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Investing in Oppor-
tunity Act’’. 
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SEC. 2. OPPORTUNITY ZONES. 
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following: 
‘‘Subchapter Z—Opportunity Zones 
‘‘Sec. 1400Z–1. Designation. 
‘‘Sec. 1400Z–2. Deferral for capital gains invested in opportunity zones. 
‘‘SEC. 1400Z–1. DESIGNATION. 
‘‘(a) QUALIFIED OPPORTUNITY ZONE DEFINED.— 
For the purposes of this subchapter, the term ‘qualified 
opportunity zone’ means a population census tract that 
is a low-income community that is designated as a quali-
fied opportunity zone. 
‘‘(b) DESIGNATION.— 
‘‘(1) GOVERNOR.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), a population census tract that is a 
low-income community is designated as a quali-
fied opportunity zone if— 
‘‘(i) not later than the end of the de-
termination period, the governor of the 
State in which the tract is located— 
‘‘(I) nominates the tract for des-
ignation as a qualified opportunity 
zone, and 
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‘‘(II) notifies the Secretary in 
writing of such nomination, and 
‘‘(ii) the Secretary certifies such nomi-
nation and designates such tract as a 
qualified opportunity zone before the end 
of the consideration period. 
‘‘(B) EXTENSION
OF
PERIODS.—A gov-
ernor may request that the Secretary extend ei-
ther the determination or consideration period, 
or both (determined without regard to this sub-
paragraph), for an additional 30 days. 
‘‘(C) DEEMED
DESIGNATION
IF
SEC-
RETARY FAILS TO ACT.—Unless the tracts are 
ineligible for designation, if the Secretary de-
clines in writing to make such certification and 
designation or fails to act before the end of the 
consideration period, such nomination shall be 
deemed to be certified and designated, effective 
on the day after the last day of the consider-
ation period. 
‘‘(2) SECRETARY.—If a governor fails to make 
the nominations and notifications by the end of the 
periods referred to in paragraphs (1)(A) and (1)(B), 
the Secretary shall designate and certify population 
census tracts that are low-income communities as 
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qualified opportunity zones, as permitted by sub-
section (e). 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
subsection— 
‘‘(1) LOW-INCOME
COMMUNITIES.—The term 
‘low-income community’ has the same meaning as 
when used in section 45D(e). 
‘‘(2) DEFINITION OF PERIODS.— 
‘‘(A) CONSIDERATION PERIOD.—The term 
‘consideration period’ means the 30-day period 
beginning on the date on which the Secretary 
receives 
notice 
under 
subsection 
(b)(1)(A)(i)(II), as extended under subsection 
(b)(1)(B). 
‘‘(B) DETERMINATION PERIOD.—The term 
‘determination period’ means the 90-day period 
beginning on the date of the enactment of the 
Investing in Opportunity Act, as extended 
under subsection (b)(1)(B). 
‘‘(d) GUIDANCE FOR OPPORTUNITY ZONE NOMINA-
TIONS.—When considering the nomination of qualified op-
portunity zones, governors should strive for the creation 
of qualified opportunity zones that are geographically con-
centrated and contiguous clusters of population census 
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tracts and should give particular consideration to areas 
that— 
‘‘(1) are currently the focus of mutually rein-
forcing State, local, or private economic development 
initiatives to attract investment and foster startup 
activity, 
‘‘(2) have demonstrated success in geographi-
cally targeted development programs, such as prom-
ise zones, new market tax credit, empowerment 
zones, and renewal communities, and 
‘‘(3) have recently experienced significant lay-
offs due to business closures or relocations. 
‘‘(e) NUMBER OF DESIGNATIONS.— 
‘‘(1) IN
GENERAL.—Except as provided by 
paragraph (2), the number of population census 
tracts in a State that may be designated as qualified 
opportunity zones under this section may not exceed 
25 percent of the number of low-income communities 
in the State. 
‘‘(2) EXCEPTION.—If the number of low-income 
communities in a State is less than 100, then a total 
of 25 of such tracts may be designated as qualified 
opportunity zones. 
‘‘(f) DESIGNATION OF TRACTS CONTIGUOUS WITH 
LOW-INCOME COMMUNITIES.— 
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case of the sale or exchange of qualified opportunity 
zone property, or an investment in a qualified oppor-
tunity fund, held for at least 10 years, gross income 
for the taxable year shall not include any gain from 
the sale or exchange of such property or investment. 
‘‘(4) ONE ELECTION PER PROPERTY.—No elec-
tion may be made under paragraph (1) with respect 
to a sale or exchange if an election previously made 
with respect to such sale or exchange is in effect. 
‘‘(b) BASIS RULES RELATING TO QUALIFIED OPPOR-
TUNITY ZONE PROPERTY.— 
‘‘(1) REDUCED
BY
GAIN
DEFERRED
UNDER 
SUBSECTION (a)(1).—The basis of a qualified oppor-
tunity zone property immediately after its acquisi-
tion under subsection (a) shall be reduced by the 
amount of gain deferred by reason of subsection 
(a)(1)(A) with respect to such property. 
‘‘(2) INCREASE FOR GAIN RECOGNIZED UNDER 
SUBSECTION (a)(2).—The basis of qualified oppor-
tunity zone property shall be increased by the 
amount of gain recognized by reason of subsection 
(a)(2) with respect to such property. 
‘‘(3) SUBSEQUENT
INCREASE
IN
BASIS
FOR 
PROPERTY HELD FOR AT LEAST 5 YEARS BUT LESS 
THAN 10 YEARS.—In the case of qualified oppor-
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tunity zone property held for at least 5 years but 
less than 10 years— 
‘‘(A) PROPERTY HELD FOR 5 YEARS.—For 
qualified opportunity zone property held for at 
least 5 years, the basis of such property shall 
be increased by an amount equal to 10 percent 
of the amount of gain deferred by reason of 
subsection (a)(1)(A) with respect to such prop-
erty. 
‘‘(B) PROPERTY HELD FOR 7 YEARS.—For 
qualified opportunity zone property held for at 
least 7 years, the basis of such property shall 
be increased by an amount equal to 5 percent 
of the amount of gain deferred by reason of 
subsection (a)(1)(A) with respect to such prop-
erty. 
‘‘(c) QUALIFIED OPPORTUNITY ZONE PROPERTY.— 
For purposes of this section: 
‘‘(1) IN GENERAL.—The term ‘qualified oppor-
tunity zone property’ means property which is— 
‘‘(A) qualified opportunity zone stock, 
‘‘(B) qualified opportunity zone partner-
ship interest, 
‘‘(C) qualified opportunity zone business 
property, or 
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‘‘(D) an interest in a qualified investment 
fund. 
‘‘(2) QUALIFIED OPPORTUNITY ZONE STOCK.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘qualified oppor-
tunity zone stock’ means any stock in a domes-
tic corporation if— 
‘‘(i) such stock is acquired by the tax-
payer after December 31, 2017, at its 
original issue (directly or through an un-
derwriter) from the corporation solely in 
exchange for cash, 
‘‘(ii) as of the time such stock was 
issued, such corporation was a qualified 
opportunity zone business (or, in the case 
of a new corporation, such corporation was 
being organized for purposes of being a 
qualified opportunity zone business), and 
‘‘(iii) during substantially all of the 
taxpayer’s holding period for such stock, 
such corporation qualified as a qualified 
opportunity zone business. 
‘‘(B) REDEMPTIONS.—A rule similar to 
the rule of section 1202(c)(3) shall apply for 
purposes of this paragraph. 
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‘‘(3) QUALIFIED OPPORTUNITY ZONE PARTNER-
SHIP
INTEREST.—The term ‘qualified opportunity 
zone partnership interest’ means any capital or prof-
its interest in a domestic partnership if— 
‘‘(A) such interest is acquired by the tax-
payer after December 31, 2017, from the part-
nership solely in exchange for cash, 
‘‘(B) as of the time such interest was ac-
quired, such partnership was a qualified oppor-
tunity zone business (or, in the case of a new 
partnership, such partnership was being orga-
nized for purposes of being a qualified oppor-
tunity zone business), and 
‘‘(C) during substantially all of the tax-
payer’s holding period for such interest, such 
partnership qualified as a qualified opportunity 
zone business. 
‘‘(4) QUALIFIED OPPORTUNITY ZONE BUSINESS 
PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
opportunity zone business property’ means tan-
gible property used in a trade or business of the 
taxpayer if— 
‘‘(i) such property was acquired by 
the taxpayer by purchase (as defined in 
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section 179(d)(2)) after December 31, 
2017, 
‘‘(ii) the original use of such property 
in the qualified opportunity zone com-
mences with the taxpayer or the taxpayer 
substantially improves the property, and 
‘‘(iii) during substantially all of the 
taxpayer’s holding period for such prop-
erty, substantially all of the use of such 
property was in a qualified opportunity 
zone. 
‘‘(B) SUBSTANTIAL
IMPROVEMENT.—For 
purposes of subparagraph (A)(ii), property shall 
be treated as substantially improved by the tax-
payer only if, during any 30-month period be-
ginning after the date of acquisition of such 
property, additions to basis with respect to such 
property in the hands of the taxpayer exceed an 
amount equal to the adjusted basis of such 
property at the beginning of such 30-month pe-
riod in the hands of the taxpayer. 
‘‘(C) RELATED PARTY.—For purposes of 
subparagraph (A)(i), the related person rule of 
section 179(d)(2) shall be applied pursuant to 
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paragraph (8) of this subsection in lieu of the 
application of such rule in section 179(d)(2)(A). 
‘‘(5) QUALIFIED
OPPORTUNITY
FUND.—The 
term ‘qualified opportunity fund’ means any invest-
ment vehicle organized as a corporation or a part-
nership for the purpose of investing in qualified op-
portunity zone property (other than another quali-
fied opportunity fund) that holds at least 90 percent 
of its assets in qualified opportunity zone property, 
determined— 
‘‘(A) on the last day of the first 6-month 
period of the taxable year of the fund, and 
‘‘(B) on the last day of the taxable year of 
the fund. 
‘‘(6) QUALIFIED
OPPORTUNITY
ZONE
BUSI-
NESS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
opportunity zone business’ means a trade or 
business— 
‘‘(i) in which substantially all of the 
tangible property owned or leased by the 
taxpayer is qualified opportunity zone busi-
ness property, 
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‘‘(ii) which satisfies the requirements 
of paragraphs (2), (4), and (8) of section 
1397C(b), and 
‘‘(iii) which is not described in section 
144(c)(6)(B). 
‘‘(B) SPECIAL
RULE.—For purposes of 
subparagraph (A), tangible property that ceases 
to be a qualified opportunity zone business 
property shall continue to be treated as a quali-
fied opportunity zone business property for the 
lesser of— 
‘‘(i) 5 years after the date on which 
such tangible property ceases to be so 
qualified, or 
‘‘(ii) the date on which such tangible 
property is no longer held by the qualified 
opportunity zone business. 
‘‘(d) APPLICABLE RULES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion and except as otherwise provided in this section, 
rules similar to the rules applicable to deferred like 
kind exchanges under section 1031 shall apply ex-
cept that reinvestment in opportunity zone property 
need not require an intermediary party. 
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‘‘(2) RELATED PERSONS.—For purposes of this 
subsection, persons are related to each other if such 
persons are described in section 267(b) or 707(b)(1), 
determined by substituting ‘20 percent’ for ‘50 per-
cent’ each place it occurs in such sections. 
‘‘(3) DECEDENTS.—In the case of a decedent, 
amounts recognized under this section shall, if not 
properly includible in the gross income of the dece-
dent, be includible in gross income as provided by 
section 691. 
‘‘(4) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this section, 
including— 
‘‘(A) rules providing for proportionate in-
clusion in income and increases in basis for 
purposes of subsections (a) and (b) in cases in 
which a sale or exchange of any qualified oppor-
tunity zone property with respect to which gain 
is deferred under subsection (a)(1)(A) is less 
than all of such property, 
‘‘(B) rules requiring taxpayers to provide 
such information as the Secretary determines to 
be necessary or appropriate for the identifica-
tion of both the assets sold (including basis and 
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sale price) and the assets acquired and invest-
ments made, and 
‘‘(C) rules to prevent abuse. 
‘‘(e) FAILURE OF QUALIFIED OPPORTUNITY FUND 
TO MAINTAIN INVESTMENT STANDARD.— 
‘‘(1) IN GENERAL.—If a qualified opportunity 
fund fails to meet the 90-percent requirement of 
subsection (c)(5), the qualified opportunity fund 
shall pay a penalty for each month it fails to meet 
the requirement in an amount equal to the product 
of— 
‘‘(A) the excess of— 
‘‘(i) the amount equal to 90 percent of 
its aggregate assets, over 
‘‘(ii) the aggregate amount of quali-
fied opportunity zone property held by the 
fund, multiplied by 
‘‘(B) the underpayment rate established 
under section 6621(a)(2) for such month. 
‘‘(2) SPECIAL RULE FOR PARTNERSHIPS.—In 
the case that the qualified opportunity fund is a 
partnership, the penalty imposed by paragraph (1) 
shall be taken into account proportionately as part 
of the distributive share of each partner of the part-
nership. 
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‘‘(3) REASONABLE
CAUSE
EXCEPTION.—No 
penalty shall be imposed under this subsection with 
respect to any failure if it is shown that such failure 
is due to reasonable cause.’’. 
(b) BASIS ADJUSTMENTS.—Section 1016(a) of such 
Code is amended by striking ‘‘and’’ at the end of para-
graph (36), by striking the period at the end of paragraph 
(37) and inserting ‘‘, and’’, and by inserting after para-
graph (37) the following: 
‘‘(38) to the extent provided in section 1400Z– 
2(b).’’. 
(c) REPORT TO CONGRESS.—The Secretary of the 
Treasury, or the Secretary’s delegate, shall submit a re-
port to Congress on the opportunity zone incentives en-
acted by this section beginning 5 years after the date of 
enactment of this Act and annually thereafter. The report 
shall include an assessment of investments held by quali-
fied opportunity funds nationally and at the State level. 
To the extent such information is available, the report 
shall include the number of qualified opportunity funds, 
the amount of assets held in qualified opportunity funds, 
the composition of qualified opportunity fund investments 
by asset class, the percentage of qualified opportunity zone 
census tracts designated under subchapter Z of the Inter-
nal Revenue Code of 1986 (as added by this section) that 
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have received qualified opportunity fund investments. The 
report shall also include an assessment of the impacts and 
outcomes of the investments in those areas on economic 
indicators including job creation, poverty reduction, and 
new business starts, and other metrics as determined by 
the Secretary. 
(d) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 of such Code is amended by adding 
at the end the following new item: 
‘‘SUBCHAPTER Z. OPPORTUNITY ZONES’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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