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Investments in qualified opportunity funds QOFs offer a number of distinct tax benefits, not the least of which is reduced capital gains tax liability. But the rules governing these investments are in some cases—severely restrictive.
QOZ stock must be stock in a US corporation and a QOZ partnership interest must be an interest in a domestic partnership. A QOZB is a trade or business in which at least 70% of the tangible property owned or leased by the corporation or partnership is QOZB property.
This article focuses on what precisely a fund must do to qualify as a QOF. The ability of a fund to attract capital from eligible investments is critically dependent upon whether it satisfies the definition of a QOF.