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New Opportunity Zone Tract in Puerto Rico Has Trump Ties

June 25, 2019, 10:01 PM

Investments in two additional census tracts in Puerto Rico—including one linked to a failed Trump venture—can now qualify for the 2017 tax overhaul’s opportunity zone tax breaks.

The Internal Revenue Service added the two zones—census tracts 72119130102 and 72137122002, bringing the total number of areas to 8,766—in Notice 2019-42, released June 25.

  • Tract 72119130102 is home to Coco Beach Golf Club, which partnered with the Trump Organization before filing for bankruptcy in 2015.
  • Under tax code Section 1400Z-1, states and U.S. territories can choose census tracts for the incentives—subject to Treasury Department approval—based on their poverty levels and median income relative to the rest of the state or metro area, whichever is higher.
  • Investors who put their profits from stocks and other assets into funds supporting projects in the zones can defer and, depending on how long they hold the investment, reduce tax on those gains under Section 1400Z-2.
  • The incentives have triggered warnings of accelerated gentrification and tax advantages for projects in already-hot real estate markets, including a Los Angeles arts district and wide swaths of well-developed Brooklyn.

To contact the reporter on this story: Lydia O'Neal in Washington at loneal@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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