President Donald Trump signed an Executive Order this week intended to jump-start the creation of regulations for the new tax-sheltering Qualified Opportunity Zone program, which was established by his 2017 Tax Cuts and Jobs Act.

The program provides a potentially lucrative tax incentive for clients to make long-term investments in 8,700 communities nationwide which the U.S. Treasury and Internal Revenue Service have designated as economically-distressed zones.

Trump’s order, signed Dec. 12, establishes the White House Opportunity Council, which will be led by the U.S. Department of Housing and Urban Development Secretary Ben Carson and include representatives from 13 federal agencies. Trump’s order sets a 90-day timetable for the new council to produce a list of best practices, regulatory and policy changes.

James Hickey, chief investment strategist for HD Vest Financial Services, an Irving, Texas-based firm which has a roster of 4,000 advisors specializing in tax and investment planning, welcomed this news from the Oval Office as a sign that investors may get clarity that so far has been lacking about the new program.

“My initial thought is that this is a response to all the delays in launching the Opportunity Zone regulations. It’s a year later, and there are still material issues where prospective investors are waiting for guidance from the regulators,” Hickey writes in an email. “By creating this council, he is putting pressure on the government agencies to formalize the program. Additionally, it may be valuable as a way to pioneer new programs and initiatives within opportunity zones and other economically distressed communities.”

Hickey hopes the council serves as a resource to consolidate efforts on economic incentives within economically distressed communities.

“Local, state, and federal government all have multiple programs, and it’s almost impossible to stay current,” Hickey says.

James Ray, a financial advisor with IHT Wealth Management in Skokie, Ill., with more than $1 billion under management, recognizes the Executive Order might strike some as progress, but remains unwilling to jump on the Opportunity Zone bandwagon. “While it may be encouraging to observe the progress that the Administration has made with the Qualified Opportunity Zone initiative, as well as to anticipate the potentially significant tax benefits that the program offers, we recommend that investors proceed with caution. As with any investment, investors must do their due diligence and look beyond the presumed tax benefits to more fully understand the merits of the investment, including future legislation changes, the management team involved, entity formation, deal structure, future tax rates, pricing, discount rates, risk, and long-term economic impact of the project,” he writes in an email. “As always, poor investments — even with potentially significant tax benefits — are still considered to be poor investments,” he adds.

In October, the Treasury issued a first tranche of guidance and proposed regulations and announced more would follow.

In a Nov. 26 letter sent to the U.S. Treasury and the IRS, a working group of accountants asked for more guidance about the new tax-sheltering Opportunity Zones regulations. The group, formed by Novogradac, a San Francisco-based national professional services organization of accountants, also warned federal agencies that investors will not flock to the zones unless they learn more from the government about the details of those regulations.

Treasury officials have scheduled a public hearing on its proposed regulations for Jan. 10, 2018.

Under the law, investors have the option to shelter capital gains from taxes if they invest for the long term in properties or businesses located in some 8,700 census tracts scattered nationwide and designated by the U.S. Treasury as economically distressed. If investors pour capital gains from selling other assets into long-term stakes in the designated zones, they can defer paying taxes on the re-invested capital gains for as many as seven years and then pay taxes on only 85% of the re-invested capital gains.

President Donald Trump (Getty)

Most significantly, if investors keep their stakes in a zone for 10 years, they will incur no tax on the additional capital gains they realize when they sell those assets. To receive any of those tax benefits, investors must “substantially improve” zone properties, according to the Treasury’s regulations. But that requirement only calls for the investors to spend an additional amount equal to the purchase value of only the structures on the zone land they acquire. One financial advisor has called the Opportunity Zones tax benefits a “Roth IRA for the rich.”