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What are the rules regarding what can be in a Qualified Opportunity Fund?

For example, can it be a limited liability company?


Answers
  • Darci Congrove

    Darci Congrove

    GBQ Partners
    June 18, 2019

    A Qualified Opportunity Fund may invest directly in assets (like real estate), but more commonly it will invest in the stock of a corporate or a membership interest in an LLC. The business or real estate within the corporation or LLC must meet the definition of "qualified Opportunity Zone property."

  • Erik Kodesch

    Erik Kodesch

    Lane Powell
    June 12, 2019

    A QOF can be any entity treated as a corporation or partnership for tax purposes. This includes an S corporation and an LLC with more than one member. A single-member LLC would have to elect out if it’s default status as a disregarded entity to be treated as a corporation to be a QOF.

  • Blake Christian
    June 12, 2019

    Yes, the QOF can be either a C corp, S corp or partnership (including LLC with two members).

  • Maria De Los Angeles Rivera

    Maria De Los Angeles Rivera

    Kevane Grant Thornton
    June 11, 2019

    An domestic entity treated as a corporation or a partnership for federal tax purposes may self-certify itself as a QOF as long as the requirements as to investment in Qualified Opportunity Zone Business Property are met. The certification is made via Form 8996.

  • Shawn Neidorf

    Shawn Neidorf

    Arizona Commerce Authority
    June 10, 2019

    It can be a partnership or a corporation. LLCs are allowed. I'd strongly suggest you discuss the best option for you with an attorney, however. (I am not a lawyer, FYI.)

  • Brad Polizzano

    Brad Polizzano

    Baker Tilly Virchow Krause
    June 11, 2019

    In short, a QOF may hold an interest in a lower tier LLC, subject to various requirements. In particular, the QOF's lower tier interest must be a "qualified Opportunity Zone business." One of the requirements to be considered a QOZ business is that "substantially all" of the property owned by the OQZ business is "qualified Opportunity Zone business property." QOZ business property is subject to the original use test or the substantial improvement test. This is a high-level discussion. There are many nuances that would need to be fleshed out based on the particular facts and circumstances.