Economic Opportunity for Distressed Communities Act

The Economic Opportunity for Distressed Communities Act creates a tax incentive for investing capital gains in designated distressed communities by allowing taxpayers to defer capital gains tax when investing in qualified distressed opportunity funds. The bill establishes a 10-year holding period with increasing basis adjustments (10% after 5 years, 5% more after 7 years) for investments held in these funds. It defines "qualified distressed opportunity funds" as investment vehicles holding at least 90% of assets in designated distressed zone property, with specific requirements for the types of property and businesses that qualify. The bill includes penalties for funds that fail to maintain the 90% asset requirement, with exceptions for reasonable cause, and applies to investments made after the act's enactment date.