Economic Opportunity for Distressed Communities Act

Tax Exclusions for Investors: Taxpayers can elect to exclude capital gains from their gross income if they invest those gains into a qualified distressed opportunity fund within a 180-day period (Section 2(a)(1)(A)).

Benefits for Long-term Investors: Investors who hold their investment for at least 5 years receive a basis increase of 10 percent of the deferred gain, and those who hold for at least 7 years receive an additional 5 percent increase (Section 2(b)(2)(B)(iii-iv)).

Significant Benefits for Long-term Holders: For investments held for at least 10 years, the taxpayer can elect to have the basis of the property equal to its fair market value on the date it is sold or exchanged (Section 2(b)(2)(C)).

Investment in Distressed Areas: The bill targets specific areas such as brownfield sites and National Priorities List facilities for investment (Section 2(d)(4)).

Deadline for Elections: No election to exclude capital gains can be made for any sale or exchange that occurs after December 31, 2033 (Section 2(a)(1)(2)(B)).

Inclusion of Deferred Gains: Gains that are deferred must eventually be included in gross income in the year the investment is sold or exchanged, or by December 31, 2033 (Section 2(b)(1)).

Penalties for Investment Funds: If a qualified distressed opportunity fund fails to keep at least 90 percent of its assets in qualified distressed opportunity zone property, the fund must pay a monthly penalty (Section 2(f)(1)).