If the fails 70% test is failed, you may be out of the program. That said, I presume there might be a reasonable cause type exception to the rule to cure the defect.
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What happens with an QOZB that fails the 70% asset test?
Do the regulations provide any flexibility on the 70% test?
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It depends on what you mean by "flexibility." There's flexibility in terms of the working capital safe harbor and various other provisions allowing QOZBs time to start up business operations or develop real estate. But if a QOZB fails the 70% test, there is generally no flexibility concerning penalties at the QOF level that might result, except perhaps the reasonable cause exception.
You are knocked out of the program.
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