Ask A Question

Can an EDC group be a member on a single asset LLC QOF?

If you are setting up a single asset QOF in the form of an LLC, can an EDC entity be a member of the QOF? How should the fund be structured?


Answers
  • Matthew Rappaport
    September 09, 2020

    The only reason not would be if the EDC is a straw member and it has no actual economic stake. Sometimes, EDCs are "token members" in LLCs simply to satisfy local rules or reserve governance rights over a development project. This token membership comes without any real share of cash or tax items. This might cause problems if the LLC only has one other member, in which case the IRS can allege the LLC is not a tax partnership and should not be eligible for QOF status.

  • DISCLAIMER: 

    the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.