Under Section 1031 of the Internal Revenue Code, a taxpayer may sell real property (the relinquished property) and replace it with real property of a like-kind (the replacement property) without recognizing tax on the sale if certain requirements are met. Two of those requirements involve deadlines:  the taxpayer must identify replacement property within 45 days of the sale of the relinquished property and acquire the replacement property within 180 days of the sale of the relinquished property.

Opportunity Zones have similar deadlines:  under Section 1400Z-2 of the Internal Revenue Code, taxpayers may defer capital gains that are invested in a Qualified Opportunity Fund within 180 days. These capital gains may usually be deferred until December 31, 2026, potentially avoiding any taxable gain on the liquidation of the Qualified Opportunity Fund Investment if the investment is held for at least 10 years.

As a result of the ongoing coronavirus pandemic, taxpayers were understandably concerned about their ability to meet these 45-day and 180-day requirements.  Thankfully, the Internal Revenue Service issued Notice 2020-23, which extends the deadline to July 15, 2020, for several types of returns and other requirements that were due to be performed between April 1, 2020 and July 15, 2020.

The notice specifically provides an automatic extension of the Section 1031 deadlines until July 15, 2020, and the Section 1400Z-2 deadline for any period that would end between April 1, 2020 and July 15, 2020.   Obviously, this is welcome news to taxpayers who were unsure if they could comply with looming deadlines.