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MarketScreener Homepage  >  Equities  >  Nasdaq  >  SS&C Technologies Holdings, Inc.    SSNC

SS&C TECHNOLOGIES HOLDINGS, INC.

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SS&C Technologies : Opportunity zones evolving regulations

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04/15/2019 | 03:53am EDT

Under the Opportunity Zone program, investors can defer tax on any prior gains by investing them in a qualified opportunity fund. On February 14th, the Internal Revenue Service (IRS) held an initial public hearing to discuss the regulations and guidance for investing in Qualified Opportunity Zone (QOZ) funds.

Many investors had high hopes for this hearing anticipating that it would clear up ambiguities around the following concepts: what constitutes 'Original Use', re-investing proceeds in addition OZones, type of gains that can be deferred, deferral timing, specific guidelines on 50% gross income test, specifications on the 30 month substantial improvements policy and finally, how the QOZ program can work with other tax credits.

The hearing took over five hours as the IRS sought feedback on the proposed regulations. Over 200 people attended, with most expressing concern that the lack of clarity is preventing investment. The hearing also featured two dozen speakers discussing concerns with the current QOZ rules and providing suggestions on improvement. Some of these changes to the program include[1] :

  • Extending the 180 day period for capital gains recognized during 2018 through the first 180 day of 2019.
  • Removing the requirement that 50% of the gross income of a qualified opportunity zone business is derived from the active conduct of a business in the qualified opportunity zone.
  • Eliminating the requirement for GAAP reporting to test 90% and 70% requirements and allow and election to use unadjusted income.
  • Introduction of new requirement that tangible property be substantially improved based on the aggregate tax basis of the overall tax basis of the tangible property acquired (not including land) instead of application occurring for each separate item acquired.
  • Additional clarity of whether suspended passive losses associated with property sold can be deferred and permitted in a Qualified Opportunity Fund (QOF).
  • Extending the 31 month safe harbors of operating cash if events occur that are beyond the company's control.
  • Allowing continued tax free appreciation and permitted deferred gain upon reinvestment of sales proceeds from the sale of investment in the zone business, operating entity or zone property.
  • Allowing for the sale of qualified assets or interests in operating partnerships to qualify for the 10 year basis step up.
  • Allowing remediation and demolition costs to be included within the 'substantial improvement' and allow for additional time within 31 months when demolition is included. In addition, if property is demolished, that the IRS would consider it 'original use'.
  • Allowing QOF investors 12 months to invest the capital gain proceeds rather than the proposed 6 months.
  • Request that all QOF reporting be simple and unobtrusive.
  • Allowing for a change in status of vacant land and property (utilized for more than 1 year) to qualify as original use within an opportunity zone.
  • Allowing for grantor of a grantor trust to make election to make deferred gain election. In addition if the grantor dies, before a ten year hold period, that the estate be allowed to make election for tax free appreciation.

On March 12, 2019, the U.S. Treasury Department submitted the second set of proposed regulations to the Office of Information and Regulatory Affairs ('OIRA'), a division of the White House Management of the Budget. While we don't have insight into the proposed regulations and whether they contemplate the items above, they will be mandated for review for at least 10 days before final publication in the Federal Register. Investors and sponsors hope that the new regulations will answer the outstanding questions that were raised after the first set of regulations were released in October 2018.

To learn more about Opportunity Zones, visit our resource center. There you will find an overview of the program, insight about what we've been seeing in the marketplace and how one of our clients, Midas Hospitality, is taking advantage of the program's benefits.


Alternative Investments, Fund Administration, Real Estate & Property Management

compliance , fund administration , Opportunity Zone Fund , Qualified Opportunity Zone , Opportunity Zones

Disclaimer

SS&C Technologies Holdings Inc. published this content on 15 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 15 April 2019 07:52:02 UTC

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Financials (USD)
Sales 2019 4 708 M
EBIT 2019 1 759 M
Net income 2019 419 M
Debt 2019 7 105 M
Yield 2019 0,69%
P/E ratio 2019 39,5x
P/E ratio 2020 29,9x
EV / Sales2019 4,64x
EV / Sales2020 4,26x
Capitalization 14 719 M
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William Charles Stone Chairman & Chief Executive Officer
Rahul Kanwar President & Chief Operating Officer
Patrick John Louis Pedonti Chief Financial Officer & Senior Vice President
C. V. Channagiri Chief Information Officer
Anthony Caiafa Chief Technology Officer
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