A QOF may be able to acquire an existing business outside an OZ and move it into an OZ. However, it will generally be difficult to acquire a business already operating in an OZ due to the “original use” in the zone requirement. However, since leased assets are not subject to the original use requirement this may be a workable structure, albeit a bit clunky. The new regs clarify that the “substantial improvement” test is applied on an asset-by-asset basis rather than on an aggregate basis, so it's difficult to turn used machines/equipment into original-use property.
