Sunday, February 23, 2020
Hawai'i Free Press

Current Articles | Archives

Sunday, March 18, 2018
An Opportunity for Opportunity Zones
By Tom Yamachika @ 5:00 AM :: 2459 Views :: Tax Credits

An Opportunity for Opportunity Zones

by Tom Yamachika, President Tax Foundation Hawaii

Dear Governor Ige:

Whatever you may think of President Trump and the Republican-dominated Congress, they have thrown an opportunity our way, and you need to take action very soon—by March 21, 2018, to be exact—to take advantage of it.

The Trump tax overhaul act, sometimes known as the Tax Cuts and Jobs Act, provides two main incentives to encourage investment in “qualified opportunity zones.”

The first incentive allows taxpayers to defer capital gains if they sell other property and invest the proceeds in a “qualified opportunity zone fund,” which then invests in property in a qualified opportunity zone (and is penalized if it doesn’t). The taxpayer’s basis of an investment in such a fund is initially zero, but after five years the basis is increased by 10% of the gain deferred, meaning that the taxpayer escapes tax on 10% of the capital gain. Two years later, the basis rises by another 5% of the gain deferred. If the taxpayer holds the investment until December 31, 2026, the basis jumps up to the full amount of the capital gain deferred.

What about the appreciation, if any, of the value in the taxpayer’s investment? That is where the second incentive kicks in. If a taxpayer holds an investment in a qualified opportunity zone fund for at least ten years, the taxpayer may elect to have the basis in that investment be the fair market value of that investment at the time of sale. This means that if the value of the investment has risen, the investment will entirely escape capital gains tax. And if the value of the investment went south, the taxpayer does not have to make the election, and can realize losses like any other investment.

So what is a qualified opportunity zone? That’s where you come in. Governors may submit nominations for a limited number of opportunity zones to the Secretary of the Treasury for certification and designation. If the number of low-income communities in a State is less than 100, the Governor may designate up to 25 census tracts, otherwise the Governor may designate tracts not exceeding 25 percent of the number of low-income communities in the State. Governors must provide particular consideration to areas that: (1) are currently the focus of mutually reinforcing state, local, or private economic development initiatives to attract investment and foster startup activity; (2) have demonstrated success in geographically targeted development programs such as promise zones, the new markets tax credit, empowerment zones, and renewal communities; and (3) have recently experienced significant layoffs due to business closures or relocations. There is a limited window of opportunity. Governors must nominate tracts by March 21, 2018 or request a 30-day extension of time by that deadline. Otherwise, the opportunity expires and may never return.

You may have heard of the New Markets Tax Credit program. That program, like this one, provides tax incentives to invest in economically distressed areas. Funds are typically organized on the Mainland and look for good areas to invest in, including in Hawaii. According to the New Markets Tax Credit Coalition, between 2003 and 2015, $104.9 million in NMTC allocations leveraged an additional $79.2 million from other sources for a total of $184.1 million in project investments to 10 Hawaii businesses and revitalization efforts, creating 1,712 jobs.

Unlike the New Markets Tax Credit program, however, this one has no fixed limit on benefit allocations. Let’s not pass this up.


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

808 State Update AM940


ACA Signups Hawaii



Alliance Defending Freedom

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii



Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust 

Build More Hawaiian Homes Working Group

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

CSIS Pacific Forum

DAR Hawaii

DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute

Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube


Hump Day Report

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

Judgepedia Hawaii

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii


National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii


Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Cope

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii