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Bill Conaboy, Counsel in the firm's Healthcare section and co-chair of our Opportunity Zones team, expresses concern about the details of the Treasury's recently released guidance regarding Opportunity Zones, specifically the lack of clarity on what "substantial compliance means."

“Can someone come up with a sham plan or a sham schedule and claim they are substantially complying but just keep cash in the fund for a long period of time, take advantage of the deferrals, and sell the fund without actually doing anything other than holding cash?” he asked. “I don’t know, because I don’t know what substantial compliance means. So we’ll see if there’s future guidance on that.”

Overall, he believes the new regulations are overall beneficial to taxpayers and communities.

“I think Treasury did a great job adhering to the spirit of this and encouraging folks to move trillions of dollars in unrealized capital gains in the sidelines and get it in the street,” Conaboy said. “They’re clearly doing their best to not overcomplicate things and encourage folks to immediately enter into business arrangements and set up new opportunity zone funds now.”

Read more in Law360 Tax Authority's "Opportunity Zone Regs Could Still Leave Openings for Abuse."