Brad Cohen
Jeffer Mangels Butler & MitchellOctober 01, 2020
Yes.
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Can a Qualified Opportunity Fund make investments in multiple Opportunity Zones?
Can a Qualified Opportunity Fund make investments in multiple Opportunity Zones, or only in the zone that the fund is established?
Answers
Yes.
Yes, there is no restriction on making investments into multiple zones.
A QOF may invest in one or more Opportunity Zones.
Yes.
Yes, an Opportunity Zone Fund may make investments in multiple Opportunity Zones. Also, the fund may be established outside of an Opportunity Zone so long as its investments meet the 90% biannual testing requirements.
Yes, it can in multiple Opportunity Zones, but not in another Opportunity Zone Fund.
A Qualified Opportunity Fund can have qualifying activities in more than one Qualified Opportunity Zone. A key part of the statute defines qualifying“business property” as being in “a qualified opportunity zone.”See Sec. 1.1400 Z-2(d)(2)(A)(iii). It isn’t limited to qualifying property in “the” qualified opportunity zone. In issuing regulations, the IRS commentary often refers to use in “a” qualified opportunity zone. The regulations with commentary run 544 pages; see references to use in “a” qualifying zone at pages 124, 154, 161, 162 as examples. See the discussion at pages 165-167, including the reference to “multiple zones” at page 165. (TD 9889, “Investing in Qualified Opportunity Funds,”irs.gov.) See also the IRS web site with Q&As on qualified opportunity funds; particularly questions 49 and 50. The math that determines whether the mobile business property is used in a qualified opportunity zone turns on days of use. Question 50 demonstrates that in resolving whether tangible personal property is used in “a” qualified opportunity zone, one sums up the days of use in different qualified opportunity zones.
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