The IRS has released the list of designated qualified opportunity zones under IRC §1400Z-1 in Notice 2018-48. The 383 page list defines areas for investment that can be used for qualified investments under IRC §1400Z-2 added by the Tax Cuts and Jobs Act.

The purpose of IRC §§1400Z-1 and 1400Z-2 was to offer significant tax incentives to encourage investment in certain disadvantaged areas identified by state and local officials. The designated areas are submitted to the IRS for listing.

The qualified opportunity zone fund provides a number of benefits to investors in a qualified fund. Those include:

The ability to defer gains from the sale of property held by the taxpayer sold to a third party so long as the gain is invested in a qualified opportunity zone fund within 180 days beginning on the date of sale of the gain producing property. [IRC §1400Z-1(a)]
The deferred gain is includable in income on the earlier of the date the investment in the fund is sold or December 31, 2026. However, this deferred gain is slowly transformed to tax-exempt gain over time. If the investment is held over 5 years, the basis in the deferred gain (which starts out at zero) is increased to 10% of the deferred gain. If the taxpayer holds the property more than 7 years the excluded gain increases by an additional 5% of the deferred gain. [IRC §1400Z-2(a)(2)(B)]
If the qualified opportunity fund investment is held for at least 10 years, the taxpayer may elect to have the basis of such property set as equal to the fair market value of the investment on the date the investment is sold or exchanged. [IRC §1400Z-2(c)]