What new regulations do I need to follow when it becomes a QOF?
You likely want to convert your limited liability company to a Qualified Opportunity Zone Business, not a QOF. There are fewer restrictions on your activities at the QOZB level such as a QOF has to have 90% of its assets in a Qualified Opportunity Zone while a QOZB only must have 70% of its Qualified Opportunity Zone Business Property in an Opportunity Zone. With respect to cash and other non-qualified assets, a QOZB, just in this instance, provides significantly greater flexibility.
For an existing LLC, you'd need to amend the purpose clause of your Articles of Organization and your operating agreement to reflect an exclusive purpose of serving as a Qualified Opportunity Fund, with an additional clause describing the specific business the fund plans on conducting. Upon filing the LLC's initial federal income tax return, you'll need to attach IRS Form 8996 electing QOF status, and that's all you need.
An existing LLC can amend its articles of organization to state it is to be used/formed for the purposes of Opportunity Zone investment, but then any prior property would be subject to the testing rules and also related party rules. I advise setting up a new entity.
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